UK Calls for BOE Flexibility in Stablecoin Regulations

Financial market participants in the UK are urging the Bank of England (BOE) to ease proposed restrictions on stablecoins. Industry representatives argue that the current draft regulation could stifle innovation and weaken the country's competitiveness in the crypto ecosystem. The BOE's stringent capital and liquidity requirements for stablecoin issuers are seen as particularly burdensome for small and medium-sized firms. Critics say these rules are more restrictive than similar regulations in the US and the European Union, potentially driving investors away from the UK. Meanwhile, authorities highlight the potential risks stablecoins pose to financial stability. The BOE warns that the proliferation of digital assets could disrupt monetary policy transmission mechanisms and increase threats to the banking system. Despite calls for a step back from the industry, regulators are expected to maintain a cautious approach. Following consultations between the UK Treasury and the BOE, the final regulatory text is expected to be clarified by the end of the year. This is not investment advice.