The Bank of England’s proposals to integrate regulated stablecoins into the British economy have been blasted as too cautious and discouraging adoption by a payments trade body.
Riccardo Tordera-Ricchi, vice president for policy and government relations at the Payments Association has warned current proposals from the Bank of England would create a regime that “discourages the issuance of sterling stablecoins”.
Among the primary concerns is the imposition of holding limits laid out by the UK’s central bank.
The current proposed regime would see a holding limit of stablecoins of £20,000 for individuals and £10m for businesses, which is seen as overly limiting by the industry body.
The Bank of England has laid out requirements for issuers of stablecoins to hold significant backing assets, currently set to a 60:40 split between stablecoins and central bank deposits.
The requirement was conceived of to ensure that a sterling-pegged stablecoin could reliably maintain the value of £1.
Tordera-Ricchi, however, has said that members of the Payments Association believe the “composition of backing assets” is too strict, instead urging an “80:20” requirement.
Lastly, the Payments Association as criticised the proposal’s lack of clarity regarding the regulatory authority responsible for stablecoin issuers.
Current proposals would see a two-body system in place wherein the Financial Conduct Authority (FCA) would regulate smaller “non-systemic” payment providers while the Bank of England would be responsible for providers of such a size that a failure would cause major ramifications for the wider economy.
Tordera-Ricchi called for the Bank of England to “provide a clearer transition from the FCA’s non-systemic regime to the Bank’s systemic one”.
He said: “The UK cannot drive growth or retain global leadership in payments while the role of sterling stablecoins remains effectively zero, as stablecoins become an increasingly important part of the global payments landscape.”