UK Lords Committee Urges BOE to Reconsider Stablecoin Holding Caps

A House of Lords committee has urged the Bank of England to reconsider proposed limits on stablecoin holdings by individuals and companies.

The House of Lords Financial Services Regulation Committee made the recommendation in a report titled "Stablecoins: Waiting for Regulation," published on June 2. Rather than constraining market growth at an early stage, the committee said caps should be imposed only when there is a clear risk to financial stability.

The Bank of England previously proposed limiting stablecoin holdings to 20,000 pounds for individuals and 10 million pounds for companies. The UK digital-asset industry has argued the rules are stricter than those in competing jurisdictions and could hurt the country's market competitiveness.

The report also challenged rules on how stablecoin issuers manage reserves. The central bank has proposed requiring issuers to keep at least 40% of backing assets in non-interest-bearing deposits at the Bank of England. The committee said the measure could significantly damage the commercial viability of UK-based stablecoin issuers.

The Bank of England has also signaled it may soften the rules in response to the parliamentary criticism. Sarah Breeden, the BOE's deputy governor for financial stability, told the Financial Times last month that the existing proposal had been "overly conservative." She added that the central bank is closely reviewing alternatives that would manage risk while applying regulation more flexibly.