A cross-party group of UK lawmakers, including former Defense Secretary Sir Gavin Williamson, urge Chancellor Rachel Reeves to intervene in Bank of England’s stablecoin regulation. They warn that proposed rules could stifle innovation and drive capital offshore, making the UK a “global outlier.” Stablecoins are crucial to the digital economy, they say.

The parliamentarians argue that the UK risks becoming fragmented and restrictive in its approach to stablecoins, deterring adoption and weakening London’s global role. Pound-pegged stablecoins make up less than 0.1% of global issuance. The industry warns that outdated regulations could hinder the UK’s goal of becoming a leader in digital assets.

Under the Bank of England’s proposed regime for sterling-denominated stablecoins, temporary holding limits of £20,000 per coin for individuals and $13.3 million for businesses are suggested. Issuers must maintain 40% of reserves as unremunerated deposits and up to 60% in short-term UK government debt. Critics say the restrictions may push activity to more flexible jurisdictions.

In comparison to the EU’s MiCA regulation and the US’s GENIUS Act, the UK’s stablecoin restrictions could be more stringent. The EU focuses on protecting monetary sovereignty, while the US supports large-scale payment use without strict caps. UK lawmakers fear being left behind in capital markets innovation, as activity could migrate overseas if pound-pegged stablecoins are less efficient.

Read more at Cointelegraph: UK MPs Warn BoE Rules May Push Innovation Offshore