The Bank of England (BoE) will consider whether to put limits on stablecoins used for payments in new rules for the sector, Deputy Governor Jon Cunliffe said in a speech on Monday.
The BoE and the Financial Conduct Authority plan on consulting on new rules for stablecoins later this year, Cunliffe said. Last May the bank said it will regulate stablecoins that could have an impact on financial stability. Meantime, the Financial Services and Markets Bill, which will help regulators put in place rules for crypto and bring stablecoins under existing payment legislation, is nearing its final stages in Parliament.
The new rules will look to regulate stablecoins like commercial bank money, “including the requirement that the coins should be redeemable from the stablecoin arrangement, in fiat money, at par value and on demand,” Cunliffe said. Stablecoins, however, will not receive protection against failure in the same way that commercial bank deposits do. The Financial Services Compensation Scheme (FSCS) provides deposit insurance of up to 85,000 pounds (US$105,059) for bank customers.
The stablecoin rules will follow principles established by the Bank for International Settlements' Committee on Payments and Market Infrastructure and the International Organization of Securities Commissions last year, Cunliffe said.
(by Sheldon Reback)