Bank of England Plans Stablecoin Regulations
The Bank of England (BOE) is preparing new rules to regulate stablecoins. These digital currencies are backed by cash or other assets. Deputy Governor Sarah Breeden said the UK will implement the rules as quickly as the U.S.
The proposed rules will be announced on November 10, followed by a public consultation. The regulations will mainly target “systemic” stablecoins, which are widely used for payments. Smaller stablecoins will remain under lighter supervision by the Financial Conduct Authority (FCA).
Temporary Limits for Stablecoin Holdings
The new regulations will impose temporary limits on stablecoin holdings. Individuals will be capped at £20,000 ($26,000), and businesses at £10 million. These limits will stay until the Bank of England confirms stablecoins pose no threat to banks or mortgage lending.
Breeden stressed that these caps are less problematic than expected. She explained that UK mortgages are mostly funded by commercial banks. This differs from the U.S., where mortgages rely on government-backed entities and financial markets. The UK’s cautious approach reflects these differences.
Governor Bailey’s Views on Stablecoins
Bank of England Governor Andrew Bailey has warned that stablecoins could weaken trust in traditional money if they become too popular. He said central banks must monitor evolving payment systems carefully.
Bailey confirmed that caution does not mean opposition to stablecoins. The UK aims to benefit from stablecoin technology while maintaining strong safeguards.
Canada recently introduced its first federal rules for stablecoins. The Bank of Canada will spend $10 million over two years to oversee stablecoin regulation. These developments show major economies aim to balance innovation with financial stability.
