The Bank of England (BOE) will relax proposed restrictions on stablecoin holdings, amid pressure from digital asset industry players, the Financial Times reported on Thursday.
Deputy Governor for Financial Stability Sarah Breeden said the central bank’s initial plan to limit individual holdings to a maximum of 20,000 pounds ($27,000) per coin may have been “too conservative,” the Financial Times reported.
Breeden said in an interview that the Bank of England is “looking very hard at whether there are different ways to manage the risks that we think are important as stablecoins come into play.”
Stablecoins are cryptocurrencies pegged to the value of traditional financial assets, usually fiat currencies, primarily the U.S. dollar. They have been at the forefront of the development of mainstream digital asset adoption, aided by the establishment of formal regulatory regimes in some major jurisdictions.
Cryptocurrency industry players say the restrictions proposed by the Bank of England could hinder the UK’s competitiveness in the digital economy.
As far as the central bank is concerned, the proposed cap is “temporary”.
“We know from industry that the way we’re proposing to implement restrictions is cumbersome to operate as a temporary measure,” Breeden said. “So we’re thinking honestly about whether there are other ways to achieve our goals.”
The Bank of England is also preparing to lower its program requirements that at least 40% of stablecoin-backed assets should be held at the central bank and earn no interest, and 60% be invested in short-term UK government debt – a requirement that is more restrictive than in markets such as the United States
“Not surprisingly, the industry prefers to hold more interest-earning assets because it’s at stake for their bottom line,” Breeden said.
“These are important signals from the Bank of England that it is prepared to revisit its stablecoin proposals,” Katie Haries, head of European policy at Coinbase, said in an emailed comment. “We have long said that limits on stablecoin holdings are limits on innovation, which poses real and significant risks to the UK’s competitiveness.”
The Bank of England did not immediately respond to CoinDesk’s request for comment.
