UK Legislators Caution That BoE's Stablecoin Regulations May Push Capital Towards U.S. Dollars

Lawmakers' Concerns: A cross-party group of UK lawmakers is urging the government to reconsider the Bank of England's proposed stablecoin framework, arguing that it is overly restrictive and could hinder innovation while pushing capital towards dollar-backed digital assets.

Proposed Restrictions: Key issues include a £20,000 holding cap on stablecoins for individuals and a ban on earning interest on reserves, which lawmakers believe would make sterling-backed stablecoins less appealing compared to more flexible U.S. alternatives.

Impact on Fintech: The lawmakers warn that the current regulatory approach could diminish the UK's position in the global fintech landscape, potentially leading to a shift away from pound-backed stablecoins and limiting the country's influence in digital finance.

Call for a Balanced Framework: They advocate for a more progressive regulatory framework that encourages adoption and investment in UK fintech, especially as the U.S. moves towards clearer digital asset regulations, to ensure competitiveness on the global stage.