The Bank of England (BOE) is adopting a more positive stance on stablecoins, but according to the bank's deputy governor, constructive dialogue with the industry remains insufficient.
The Bank of England launched a consultation on stablecoins last November. Some of the proposed requirements drew strong criticism from crypto industry representatives, who claimed they could stifle innovation.
In recent months, the Bank of England has been working with industry groups to formulate its position on stablecoins. These collaborations include modifying support requirements and reconsidering account limits.
Some industry observers believe that the Bank of England is gradually accepting stablecoins, but much work remains to be done.
Bank of England Open to Stablecoin Risks
One of the more controversial measures is the stablecoin holding limit, i.e., £20,000 for individuals and £10 million for businesses accepting stablecoins as a payment method.
Now, the Bank of England appears to be shifting its attitude. Attending a meeting of the House of Lords Financial Services Regulation Committee on Wednesday, Bank of England Deputy Governor Sarah Breeden told lawmakers that they are willing to reconsider these restrictions.
Breeden said the proposed restrictions were to reduce the risk of large amounts of deposits being transferred to stablecoins, which could potentially destabilize banks.
She said: "We proposed holding limits to manage this risk. We are open to other ways of achieving this goal."
However, at least in Breeden's view, the feedback itself also seems to be a problem. She said: "The pressure from the industry to act differently is very real. We are a little disappointed that no one said, 'Why not do this?'"
"I don't think we've had constructive engagement on different ways of solving the problem that I might have hoped for. Instead, we get 'don't do this' and 'I understand why you're doing this' instead of filling in the blanks."
Rhodes told Cointelegraph on Thursday that this is not necessarily the case. "Over the past two years, we have reviewed thousands of pages of consultation documents from the FCA and the Bank of England, attended countless roundtables, and submitted hundreds of pages of comments on our own and as part of industry associations."
He said the main challenge facing industry and regulators is that they are developing a "comprehensive regulatory regime" for a market that has not yet developed.
Rhodes explained:
Nick Jones, founder and CEO of UK digital asset platform Zumo, said: "Industry groups have been working hard and putting forward tangible recommendations within tight deadlines."
He said feedback might be more constructive if the Bank of England followed the Financial Conduct Authority (FCA) Spring model. These time-limited workshops focus on the practical application of the technology to answer regulators' questions.
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