Overview
- The House of Lords Financial Services Regulation Committee published a report on Wednesday calling for the Bank of England to reconsider temporary holding limits and a rule that would force about 40% of stablecoin reserves into non‑interest central bank deposits.
- The BoE had proposed individual holding caps of £20,000 per coin and business caps of £10 million per coin to curb the risk of rapid bank deposit outflows, and the committee said those pre‑emptive limits should only be used if clear risks emerge.
- Lawmakers backed core safety measures including one‑to‑one fiat backing for stablecoins and the Bank’s proposed backstop lending facility for systemic issuers while urging a principles‑based, proportionate approach to other rules.
- The Bank of England has signalled it is reviewing the proposals after staff described them as “overly conservative,” and a BoE spokesperson said final policy and draft rules for systemic stablecoins will be published later in June.
- Peers and industry warned that forcing large amounts of reserves into non‑interest deposits would cut issuer revenue, limit user rewards and commercial viability, and could leave the UK lagging the US and EU in stablecoin market development.