Credit: Reuters LONDON, June 22 (Reuters) – The Bank of England relaxed some of its proposed rules on stablecoins in its final policy and draft rules on Monday, responding to widespread concern they could hinder the development of the nascent sterling-backed market.
The BoE scrapped plans to cap individual holdings, opting instead to limit total issuance per stablecoin, initially set at £40 billion ($52.8 billion).
The central bank also slightly relaxed its proposals on backing assets, increasing to 70% from 60% the share of backing assets that can be held in short-term government debt. The remainder must be held in non-interest-bearing central bank deposits.
“This is a major milestone in delivering greater choice and innovation in UK payments,” Deputy Governor for Financial Stability Sarah Breeden said.
“Innovation thrives on trust. And today we’ve set out the foundations of that trust for a new form of money – with prompt redemption, strong protections and central bank support.”
Stablecoins, a type of cryptoasset designed to hold steady value usually pegged to a fiat currency, have grown rapidly in recent years, with proponents saying they can enable faster and cheaper payments, particularly across borders.
However, the BoE has warned they could draw deposits away from the banking system, with potential implications for lending and the cost of credit.
($1 = 0.7569 pounds)
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