The UK House of Lords published a 71-page stablecoin regulatory report, criticizing the current regulatory proposals for lacking competitiveness.
According to the UK House of Lords’ Financial Services Regulation Committee’s report, “Stablecoins: Waiting for Regulation,” the global stablecoin market capitalization has exceeded $310 billion. However, the British pound (GBP) stablecoin market remains in its infancy, and the UK’s regulatory framework lags significantly behind those of the United States (the GENIUS Act) and the European Union (MiCA).
The report levels several criticisms against the current regulatory proposals put forward by the UK’s Financial Conduct Authority (FCA) and the Bank of England, with key concerns including:
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The Bank of England’s requirement that systemic stablecoin issuers hold at least 40% of their reserve assets in non-interest-bearing central bank deposits is viewed by industry participants as severely undermining issuers’ profitability and the UK’s international competitiveness in this market;
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The proposed holding limits—£20,000 per individual and £10 million per corporate entity—are considered operationally unworkable and potentially stifling to the development of the GBP stablecoin market;
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The T+1 redemption requirement would impose substantial operational burdens on issuers;
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The Prudential Regulation Authority’s (PRA) restriction prohibiting deposit-taking institutions from issuing stablecoins under independent brands is deemed overly stringent.
The report does commend the Bank of England’s proposed liquidity-support lending facility, recognizing it as an innovative regulatory measure surpassing those adopted by other major jurisdictions. The Committee urges regulators to strictly adhere to the established timeline, ensuring the full regulatory framework enters into force on 25 October 2027. It further recommends adopting a principles-based, technology-neutral regulatory approach to strike an appropriate balance between financial stability and market innovation.