UK Lords committee warns strict rules could harm GBP stablecoins

The UK House of Lords Financial Services Regulation Committee has warned that while regulation for pound sterling-based stablecoins is necessary, overly strict rules could undermine their commercial viability. According to Cointelegraph, the committee noted that the UK has fallen behind the U.S. and the European Union in implementing stablecoin regulations, and this lack of a clear framework has hindered investment and industry growth. However, the committee expressed concerns about some proposals from the Bank of England (BoE). It highlighted that a rule requiring systemically important stablecoin issuers to hold at least 40% of their reserves in non-interest-bearing central bank deposits could weaken their business case and international competitiveness. The committee also stated that holding limits and a ban on paying interest could become unnecessary constraints on the growth of GBP stablecoins, emphasizing the need for the government and regulators to strike a balance between regulation and fostering industry growth.