The Bank of England has abandoned previous proposed rules on stablecoins in its final policy and draft rules.
The latest revisions were made in response to widespread concern that the rules would stand in the way of the market’s growth and development.
Relaxed Rules
The central bank revealed on Monday that it has scrapped its plans to cap individual holdings, instead choosing to limit total issuance per stablecoin, which was initially set at $52.8 billion.
“This is a major milestone in delivering greater choice and innovation in UK payments,” said Deputy Governor for Financial Stability Sarah Breeden.
Per the bank, the new guardrail will allow systemic stablecoin firms to run viable operations and “support daily volumes and transactions” as compared to other systems.
Additionally, the BOE has reduced its requirements on backing assets, increasing the figure to 70% from 60%, which is the share of backing assets that can be held in short-term government debt. Meanwhile, the rest must now be held in central bank deposits that don’t bear any interest.
Breeden believes that innovation depends on trust and that the new guidelines will build confidence in stablecoins by ensuring quick redemptions, strong consumer protections, and Central Bank backing.
The BOE Still Has Reservations
The BOE has also warned that while stablecoins can make payments faster and cheaper for cross-border transactions, their growing adoption could reduce bank deposits and potentially affect lending and borrowing costs.
Stablecoins are here to stay, though, with most crypto executives viewing them as tools to unlock working capital and enhance treasury operations. A recent survey conducted by Ripple found that 72% of institutions believe that offering these digital assets is key to remaining competitive in the market.
Source: CryptoPotato
