UK Eases Stablecoin Rules Amid Global Regulatory Shift
The UK is taking steps to become more welcoming to stablecoins with new regulations. The Bank of England (BoE) will now have a legal duty to support innovation in payments and digital finance, as well as keep the financial system stable.
The BoE had previously planned to limit individual holdings of stablecoins due to concerns over financial stability, but this limit has been removed. Instead, there will be a £40 billion cap on the total amount of stablecoins that can be issued.
Issuers of stablecoins will also have more flexibility in reserve management as the BoE has reduced the share required to be held in non-interest-bearing central bank accounts. This allows for more funds to be placed in interest-bearing assets, increasing potential profits for issuers.
The UK's new regulations aim to balance financial stability with innovation, according to City minister Lucy Rigby. The goal is to keep the UK a global leader in finance as technologies like blockchain and tokenization continue to change how assets are traded.