Crypto Stablecoins Alarm Sounded by Bank of England

Jon Cunliffe, Deputy Governor for Financial Stability at the Bank of England, has suggested that regulators may need to limit the use of stablecoins in payments to maintain financial stability. While Cunliffe said that risks to financial stability from payment stablecoins should be manageable over time, he expressed that uncertainty persists about their adoption rate and extent. Cunliffe stressed that assets behind a stablecoin should be “of sufficient value to meet redemption requests” to avoid a scenario where systemic stablecoins pose risks to the financial system. The British government is currently consulting on new regulations to address the risks posed by digital currencies to consumers while ensuring the country remains a place for crypto firms to do business. The upcoming Financial Services and Markets Bill aims to bring asset-backed stablecoins into the regulatory fold. Prime Minister Rishi Sunak has expressed support for crypto, and the U.K. is exploring a digital version of the British pound, sometimes known as “Britcoin”.