UK House of Lords urges easing Bank of England stablecoin rules

The UK House of Lords’ Financial Services Regulation Committee urged the Bank of England (BoE) to revise parts of the proposed UK stablecoin rules, warning that overly strict or poorly timed regulation could leave the UK behind the US and EU. On UK stablecoin regulation, the committee broadly backs BoE ideas such as 1:1 reserve backing and a backstop lending facility. But it questions key details that could raise operational burdens and weaken competitiveness—especially the proposal that systemic stablecoin issuers hold at least 40% of reserves in unremunerated (non-interest) bank deposits. It also criticised temporary holding limits (initially £10,000–£20,000 per person and £10 million for businesses), arguing they may be difficult to enforce and could slow GBP stablecoin growth. The committee raised additional concerns around redemption requirements, issuer sustainability, and risks from unhosted wallets. Another uncertainty is the transition from the FCA framework to a joint regime involving the BoE, plus how HM Treasury will decide whether stablecoins are “systemic” and therefore fall into the payments regulatory perimeter. The BoE has signalled the proposals may be “overly conservative” and plans to publish final policy and draft rules later this month.