stable coins
By Evie Vavasseur
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Reserve Rules Get Easier for Issuers. The Bank also loosened the reserve requirements. Previously, issuers of systemic stablecoins had…
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Banks Face a Tougher Path Than Fintechs. Here's where it gets complicated for traditional banks.
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The Bank of England just blew up its own rulebook on stablecoins. Out goes the old individual holding limit — that £20,000 cap on personal balances and the £10 million business…
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The old framework was kind of clunky. Anyone trying to use sterling stablecoins for anything beyond small retail payments ran straight into the wall of those per-user,…
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Katie Harries from Coinbase flagged concerns about how long this "temporary" cap stays in place and whether stablecoins will eventually be cleared for wholesale market settlements.
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The Bank also loosened the reserve requirements. Previously, issuers of systemic stablecoins had to park 40% of their backing assets in non-interest-bearing central bank deposits.
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And the economics have needed help. Pound-backed stablecoins currently account for less than 0.5% of the global stablecoin market.
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Read also: Bank of England Sets £40 Billion Stablecoin Cap as 2027 Launch Nears
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The Bank's approach sits somewhere between the US and EU models. The US has focused on market growth with relatively flexible reserve rules, while the EU under MiCA has pushed…
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Here's where it gets complicated for traditional banks. The Bank of England isn't letting them just bolt a stablecoin product onto their existing operations.
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So banks are probably sitting on their hands for now, weighing whether the market opportunity justifies that setup cost.
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The insolvency-remote requirement isn't new — the Bank held firm on it through this round of changes. The concern is deposit outflows during stress events.
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See also: Bank of England to Remove Stablecoin Cap by 2027, Boosting Crypto Sector
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The Bank wants these final rules locked in by the end of 2026. That's the target, though "final rules by end of 2026" has been a moving goalpost in UK financial regulation before.
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What's clear right now: the individual cap is gone, the aggregate cap is £40 billion, the reserve requirement dropped from 40% to 30%, and banks still need separate entities to…
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