A report from the UK House of Lords committee has raised concerns regarding the future of pound sterling stablecoins, suggesting that stringent regulations could render them unviable. The cross-party Financial Services Regulation Committee emphasized the need for the UK to develop a regulatory framework for stablecoins, as it currently trails behind both the United States and the European Union.
The committee supports the Bank of England's proposed regulations but cautions that certain measures may hinder the competitiveness of UK stablecoins. Notably, a requirement for systemic issuers to maintain 40% of their backing in unremunerated central bank deposits has been criticized for potentially harming market viability. Additionally, proposed temporary holding limits for individuals and businesses could restrict the growth of GBP stablecoins.
Concerns also arise from a draft regime that would prevent interest payments to holders of sterling-denominated stablecoins. This aligns with similar restrictions in the EU and may further complicate the landscape for UK tokens, as the committee seeks to balance regulation with market sustainability.