UK Lords warn BoE could regulate pound stablecoins into irrelevance
The UK should keep moving on stablecoin regulation, but avoid rules that make pound-backed tokens commercially unviable. A House of Lords committee says the UK is behind the US and EU, and the lack of a clear regime has slowed stablecoin investment and development. It supports core ideas in the Bank of England and FCA framework, including 1:1 backing by high-quality assets and a BoE backstop facility for systemic issuers. However, it warns that requiring systemic issuers to hold 40% of reserves in unremunerated central bank deposits could hurt profitability and UK competitiveness. It also criticizes temporary holding limits for businesses and individuals as potentially unnecessary and hard to enforce. The report backs a ban on interest or remuneration for holders of sterling systemic stablecoins, but says the combination of strict reserve rules and no returns may weaken business viability. It urges Treasury, the BoE, and FCA to stay on schedule, clarify dual supervision, and adjust rules so GBP stablecoins can compete as payment tools.
