Bank of England open to revising stablecoin rules, breeden says 

Bank of England open to revising stablecoin rules, Breeden says

Bank of England's Approach to Stablecoin Regulation

Disappointment Over Industry Engagement

LONDON, March 11 (Reuters) - Bank of England Deputy Governor Sarah Breeden said on Wednesday that she was disappointed by the lack of constructive engagement over the central bank's proposed rules to regulate stablecoins pegged to the pound and said the BoE was "genuinely open" to amending its proposals.

Background on Stablecoins and Regulatory Consultation

A stablecoin is a crypto asset designed to maintain a stable value relative to a currency or other asset. The BoE consulted in November on rules for "systemic" sterling stablecoins, or those which are judged capable of becoming widely used for everyday payments. 

Industry Criticism of Proposed Rules

Industry groups have criticised proposals that would require stablecoin issuers to hold 40% of assets backing the coins at the central bank as unremunerated deposits, along with suggested limits capping stablecoin holdings at 20,000 pounds for individuals and 10 million pounds for businesses.

House of Lords Committee Appearance

Openness to Alternative Approaches

Appearing before a House of Lords committee that scrutinises financial regulators, Breeden said the BoE remained open to different approaches that could meet its financial stability objective without relying on temporary holding limits. But she said firms had not put forward other solutions. 

Lack of Constructive Alternatives

"What we've been a bit disappointed with... is nobody said, 'why not do it this way?'...Instead, what we've had is a 'don't do this'," she said. 

Review of Asset Backing Requirements

Breeden said the BoE would review whether the 60:40 split on assets backing stablecoins is "overly conservative", noting the structure was broadly aligned with measures proposed in the United States and already adopted in the European Union.

Current Role and Future of Stablecoins in the UK

Stablecoins remain a niche part of the global payments landscape and are still used largely within crypto markets, and sterling‑denominated stablecoins account for only a tiny fraction of the sector.

Uncertainty Over Stablecoin Adoption

Asked whether stablecoins were likely to take off in the UK, Breeden said she didn't know, pointing to questions over scalability, customer adoption and whether stablecoins or tokenised commercial bank deposits are the right way forward.

Next Steps for Regulation

She said the central bank would publish draft rules for consultation in June.

(Reporting by Phoebe Seers; Editing by Tommy Reggiori Wilkes, Kirsten Donovan)