The Bank of England has announced that it will start to coordinate its stablecoin regulations with the US to ensure synchronised oversight of digital assets.
Following this announcement, officials of the institution emphatised the need for a more harmonised approach to stablecoin regulation between the two countries.
In addition, it was also stressed that there is a critical need for the UK and US to maintain synchronised stablecoin regulations in order to support global harmonisation. The central bank’s approach is set to directly address industry concerns about potential delays in the process of establishing a competitive stablecoin regime compared to other jurisdictions.
More information on the Bank of England’s strategy to align stablecoin regulations with the US
The coordination effort is expected to focus on digital assets that maintain price stability through various backing mechanisms. At the same time, the Bank of England has indicated that proposed UK regulatory measures could include the initiative of holding restrictions for stablecoins as part of the broader framework. A joint regulatory approach is expected to target consistent standards for digital assets to address industry concerns and foster international stability.
This announcement follows the bank’s proposal to impose limits on stablecoin ownership, which has stirred backlash from the overall crypto industry. The BOE’s proposal required strict limits on how much stablecoin individuals and companies can own, making crypto firms worry that the measure risks stunting growth and putting Britain behind its peers.
Furthermore, the bank suggested ownership limits of between GBP 10,00 and GBP 20,000 for individuals, and GBP 10 million for businesses on systemic stablecoins, widely used for payments or likely to become so. At the same time, the suggestion came as the BOE developed a regulatory framework for digital tokens pegged to fiat currencies in collaboration with the FCA.
Following this announcement, several industry players, including Coinbase, argued that this approach is unnecessary and that imposing caps will bring negative outcomes for UK savers and for the British pound. They also argued that no other region, including Europe, has chosen to restrict stablecoin ownership in this way, and issuers will not be able to monitor who holds their tokens at any given time. However, the BoE’s caution stemmed from concerns regarding the widespread use of stablecoins, which has the possibility to drain deposits from traditional banks and weaken the financial system. Officials insisted that these limits could be transitional while the market adjusted to the rise of money digitalisation.
