The Bank of England has issued a stern warning: weakening proposed regulations for stablecoins could destabilize the financial system and trigger a serious credit crisis, Reuters reported on Tuesday.
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Deputy Governor Sarah Breeden has highlighted that the UK's approach to integrating stablecoins presents "a different set of risks" compared to that of the US. "We have to manage those carefully as we bring in this new form of money," she said.
The central bank's long-awaited new regulatory draft focuses on systemic stablecoins that are expected to become common payment methods. Key proposals include temporary holding limits of £20,000 for individuals and £10 million for businesses.
It is important to note that issuers would be required to hold 40% of their reserves in non-interest-bearing accounts at the Bank of England.