UK lawmakers push for softer stablecoin regulations

A cross‑party House of Lords Financial Services Regulation Committee has issued a report urging the Bank of England (BoE) to soften its forthcoming rules for stablecoins. The committee warns that proposals such as capping the amount of stablecoins held by individuals and businesses and requiring issuers to back tokens with non‑interest‑bearing central‑bank deposits could make a pound‑denominated stablecoin market commercially unviable.

The report, led by Conservative chair Sheila Noakes, calls for a “principles‑based, less prescriptive approach” and highlights that the United Kingdom is “lagging behind” the United States and the European Union. It recommends revisiting the 40% unremunerated deposit requirement and the temporary holding limits for businesses and individuals, arguing these measures could “undermine the viability and international competitiveness of the UK market.” The BoE is expected to publish its final policy and draft rules for systemic stablecoins later in June, with the aim of finalising the regulatory framework by year‑end.

The committee stresses that while stability and consumer protection are essential, the regulatory regime must adapt to a nascent and growing market to foster innovation without creating new avenues for illicit activity.