UK's Bank of England: Stablecoins Under Scrutiny

The Bank of England has shared its updated plans for managing stablecoins, a type of digital currency tied to stable assets like the British pound. This isn't the first time they've talked about this, but their latest ideas have sparked some debate.

Key Points

• Consultation Process: The bank has gathered input from various groups, including banks, tech experts, and individuals.
• Revised Rules: Changes have been made since the first draft, but some still find the rules too strict.
• Holding Limits:
• Individuals: Suggested cap of 20,000 pounds.
• Businesses: Suggested cap of 10 million pounds.
• Concerns:
• Some argue the limits are too low.
• Questions about the bank's authority to set these limits.

Diverging Opinions

• Critics: Believe the bank is overly cautious, especially for stablecoins used in everyday payments.
• Supporters: Agree with the bank's concerns about financial stability, as stablecoins could impact banking lending practices.

New Proposals

• Direct Access: To the bank's funds.
• Reserve Usage: For liquidity purposes.
• Market Impact: Could make the stablecoin market more competitive, but some think more could be done.

Regulatory Concerns

• Slow Progress: It's been eight years since the bank started working on these rules.
• Business Impact: Without clear rules, businesses might seek friendlier regulations elsewhere.

Bank's Stance

Despite the slow pace, the bank's message is clear: innovation is welcome, but stablecoins need strong controls to function like money.