Weaker stablecoin guidelines within the UK might danger monetary stability and set off a credit score crunch, in line with the Financial institution of England’s deputy governor, Sarah Breeden.
“We have now a unique set of dangers to handle as we transition to bringing on this new type of cash,” Breeden’s told Reuters on Tuesday. Final week, she stated that the UK can keep pace with the US on stablecoin regulation.
Crypto trade leaders have criticized the BoE’s stablecoin consultation paper launched on Monday, which proposed a comparatively strict stance on stablecoin regulation compared to the US.
One of many greatest criticisms was the BoE’s choice to retain its controversial stablecoin proposal, which limits stablecoin holdings to 10,000 British kilos ($26,300) for people and 10 million British kilos ($13.1 million) for many firms.
Breeden stated this may “halve the stress” on banks and credit score creation brought on by prospects withdrawing financial institution deposits to purchase stablecoins. She didn’t state when the measure might probably be lifted.
Stablecoins have boomed right into a $312 billion market in 2025, and nations all over the world wish to comply with US President Donald Trump’s signing of the GENIUS Act earlier this 12 months to craft comparable laws that balances trade innovation with shopper safety.
The UK built regulatory momentum from a meeting between UK Chancellor Rachel Reeves and US Treasury Secretary Scott Bessent in September, when the 2 international locations agreed to strengthen their coordination on crypto and stablecoin actions.
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The UK’s prime financial institution additionally proposed measures on stablecoin issuers, requiring them to carry 40% of the belongings backing their tokens with the BoE with out earning interest.
Breeden stated the proposal was grounded, pointing to Circle’s USDC (USDC) momentary depeg in March 2023 when round $3.3 billion of its reserves have been held on the now-collapsed Silicon Valley Financial institution.
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The BoE said that it’s open to additional suggestions and plans to finalize its regime subsequent 12 months.
It intends to manage stablecoins used for day by day funds, whereas the Monetary Conduct Authority would regulate stablecoins utilized in crypto buying and selling.
In the meantime, Coinbase and one of many UK’s most outstanding stablecoin firms, BVNK, agreed to part ways on a $2 billion deal on Tuesday, which might have boosted stablecoin adoption within the UK.
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Cointelegraph by Brayden Lindrea BoE Governor Says Weak Stablecoin Rules Could Risk Stability cointelegraph.com 2025-11-12 02:06:18
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