The UK House of Lords Financial Services Regulation Committee on Wednesday said that Britain is trailing the United States and the European Union in stablecoin regulation, calling on the Bank of England and the Financial Conduct Authority to revise several proposals it said risk stunting a nascent market before it can take root.
The committee's report, titled "Stablecoins: waiting for regulation," broadly endorsed the BoE and FCA's framework for regulating systemic and non-systemic sterling stablecoins, but flagged specific provisions as poorly calibrated against the country's international competitors.
Backing assets and holding limits
Per the report, the most pointed criticism was leveled at the Bank of England's proposal to require systemic sterling stablecoin issuers to hold at least 40% of their backing assets in unremunerated central bank deposits.
The committee said the BoE should conduct more granular modeling of those requirements, reconsider whether to remunerate those deposits at the base rate, and adopt a less prescriptive, principles-based approach to backing the overall asset composition.
