Bank of England backs down on strict stablecoin holding limits, sets $50 billion issuance cap
Key takeaways
- House of Lords committee and the crypto industry.
- The central bank also lowered to 30% the amount of backing assets in central deposits yielding no interest they require issuers of stablecoins, digital currency pegged to fiat, to have.
- While issuers can harvest yield from these T-bills, the BoE is strictly banning companies from paying interest or dividends directly to users for simply holding the stablecoin.
House of Lords committee and the crypto industry.
The central bank said it will abandon its plans to impose a £20,000 ($27,000) holding limit on individuals and a £10 million limit on corporations, in a statement on Monday, Instead, the BOE is pivoting to a macro-level "temporary issuance guardrail," capping the total circulation of any single systemic stablecoin at £40 billion ($50.6 billion).
The central bank also lowered to 30% the amount of backing assets in central deposits yielding no interest they require issuers of stablecoins, digital currency pegged to fiat, to have. This allows for stablecoin firms permitting companies to allocate up to 70% of their reserves into yield-generating, short-term U.K. government debt (T-bills) with maturities under six months, according to the statement.