The Bank of England will reportedly relax its restrictions on stablecoins following pushback from cryptocurrency companies.
This move comes after one of the central bank’s top officials said its earlier proposals might have been “overly conservative,” the Financial Times (FT) reported Thursday (May 14).
Sarah Breeden, the bank’s deputy governor for financial stability, said in an interview with the FT that it was “looking very hard at whether there are different ways we can manage what we think is an important risk as stablecoins come into play.”
As the FT notes, the stablecoin sector has divided regulators. Some see the tokens — pegged at a fixed rate to fiat currencies such as the dollar — as a method for faster and cheaper payments. Others view stablecoins as a danger to global financial stability.
“We are keen to create a regime where stablecoins can succeed and can deliver benefits to the users,” Breeden told the FT. “But it is money and we want to make sure that this new form of money is safe.”
The Bank of England has proposed temporary ownership limits on U.K. stablecoins — 20,000 pounds per coin for individuals and 10 million pounds for businesses — to avoid a major outflow of deposits from banks, the FT said. Now, the bank is considering alternatives to this plan.
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“What we have heard from industry is that the way we have proposed to implement limits is cumbersome operationally for a temporary measure,” Breeden said. “So we are genuinely open to thinking whether there are other ways of achieving our objective.”
In other stablecoin news, PYMNTS spoke with WalletConnect CEO Jess Houlgrave, who said that while the tokens have the infrastructure they need to scale, they still don’t offer a payment experience users can trust.
“We’ve gotten to this stage, predominantly actually over the last 18 months, where the technology is ready,” Houlgrave said in an interview posted Wednesday (May 13). “Liquidity is deep. I can move in and out of different assets between fiat and stablecoins easily. The enablers are there.”
Transaction volumes have soared, major financial institutions have moved into the market, and several jurisdictions have clarified their regulations. Still, stablecoins have yet to provide the type of frictionless experience consumers associate with modern payments.
“About 76% of users had abandoned a crypto payment in the last six months,” Houlgrave said, pointing to new research. “They’ve tried to pay with crypto and couldn’t.”
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