UK Lawmakers Criticize Bank of England's Stablecoin Proposals

By: Isha Das

The Bank of England is facing criticism from cross-party members of the UK Parliament regarding its proposed regulations for systemic stablecoins. The MPs, which include notable figures such as former Defense Secretary Sir Gavin Williamson and shadow Science and Tech (AI) Minister Viscount Camrose, have expressed their concerns in a letter to Chancellor Rachel Reeves. The political figures caution that the current proposals may drive innovation and capital away from the UK, risking its position in the global digital finance landscape.

The controversial proposals from the Bank of England include prohibiting most wholesale uses of stablecoins outside the Digital Securities Sandbox, curbing interest on reserves, and imposing holding caps. According to the MPs, these measures could make the UK a “global outlier” and might push stablecoin activity towards other currencies, such as the USDC and USDT. There is particular concern that the UK could fall behind other nations in the burgeoning digital finance space, with policies that are seen as “impractical and anti-innovation.”

Additionally, a spokesperson from CryptoUK echoed these sentiments, stating that such restrictions could undermine the UK’s ambitions to lead in digital finance. The letter to the Chancellor underscores the requirement for a balanced approach that effectively regulates stablecoins without stifling growth and innovation. This internal debate mirrors wider global discussions on the best practices for regulating emerging financial technologies while maintaining a competitive edge.

As the UK attempts to navigate the complexities of digital finance and cryptocurrency regulation, this development highlights the need for ongoing dialogue between policymakers and industry leaders. With the evolving landscape of digital finance, the UK’s regulatory approach will undoubtedly need to adapt to ensure it remains attractive to innovators and investors around the world.