Bank of England considers bringing stablecoins under depositor-style protection…to set rules within the year

The Bank of England (BOE) has begun reviewing whether to treat stablecoins like deposits covered by protection schemes.

According to Bloomberg on the 15th (local time), Dave Ramsden, the BOE’s deputy governor for markets and banking, said in a speech the previous day (14th) that the bank is “considering ways to maintain confidence in money if a systemically important stablecoin were to fail.” Bloomberg reported that Ramsden’s remarks suggest the BOE could extend safeguards applied to bank deposits to widely used stablecoins.

The BOE believes some stablecoins should be subject to protections similar to those for bank deposits. Ramsden said, “Over the long term, maintaining trust in stablecoins may require an insurance scheme similar to that applied to bank deposits, as well as a legal restructuring regime that ensures coinholders can become senior creditors in the event of insolvency.”

The UK’s deposit protection limit is currently up to £120,000 (about 240 million won). The BOE last month raised the limit from £85,000 to £120,000.

However, the BOE plans to cap stablecoin holdings at £20,000 per coin for individuals. For companies, holdings can be up to £10 million per coin. In addition, stablecoin issuers may hold short-term government bonds up to 60% of collateral assets.

Meanwhile, the BOE plans to draw up stablecoin regulations within the year.