Bank of England set for new innovation mandate covering stablecoins
Reported by Cointelegraph · AI-assisted summary by ChikoCorp AI News Desk
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Summary
The UK government plans to give the Bank of England (BoE) a new secondary mandate focused on supporting innovation in digital payments, particularly involving stablecoins. This mandate will cover payment systems using digital settlement assets like stablecoins, while maintaining financial stability as the BoE's primary objective. The mandate is proposed through amendments to the Financial Services and Markets Bill, which will be debated in the House of Lords in September.
Why it matters
The new mandate aims to encourage innovation in digital payments and emerging digital money technologies, potentially transforming financial markets. It includes an annual reporting requirement, which could increase public scrutiny of stablecoin regulations finalized by the BoE in June. The source notes the impact depends on how the BoE implements this innovation objective alongside its primary financial stability role.
Key context
The mandate extends an approach currently applied to central counterparties and central securities depositories that clear and settle financial assets. It follows recent UK efforts on stablecoins including regulatory adjustments, payment experiments with the Digital Pound Lab, and coordination with the US on stablecoin regulatory frameworks. The BoE recently replaced proposed limits on stablecoin holdings with a temporary issuance cap for systemic stablecoins.
Key numbers and entities
Key organizations include the Bank of England, HM Treasury, the UK government, and on-chain banking provider WeFi. Notable figures include City Minister Lucy Rigby and Maksym Sakharov, WeFi CEO. Specific figures referenced are a £40 billion ($52.9 billion) issuance cap per systemic stablecoin and at least 30% backing asset requirements in non-interest-bearing central bank deposits.
What remains unclear
The source does not specify the full details of how the BoE will balance the innovation mandate with its financial stability objective, nor the exact regulatory measures that will result from the new mandate. It is also unclear how the mandate will affect commercial viability of stablecoins in practice or how the public reporting will influence policy changes.