UK MPs warn that central bank stablecoin regulation could hinder financial innovation and lead to capital outflows

Source: DigitalToday Original Title: UK Parliament Group Warns of Innovation Drain Overseas Due to Bank of England Stablecoin Regulations Original Link:

The bipartisan group of members of the UK House of Commons and House of Lords warns that the Bank of England’s stablecoin regulatory framework could hinder financial innovation. The group includes former Defense Secretary Gavin Williamson, opposition leader for Technology and Artificial Intelligence Affairs Lord Carlos, and former Prime Minister’s Office Director Lord Hart.

The group pointed out that the regulatory framework might prevent the adoption of stablecoins and lead capital to flow overseas. The regulations include restrictions on holding large amounts of stablecoins, bans on use outside digital securities sandboxes, and other measures. Additionally, the framework stipulates that reserves held by issuers should not accrue interest. Lawmakers criticized this approach as overly conservative, especially considering that globally issued pound-pegged stablecoins account for only 0.1%.

A CEO of a leading digital asset platform stated, “The dissatisfaction across the entire digital asset industry is growing, and the UK is attempting to control future financial infrastructure using outdated regulatory frameworks.” A liquidity protocol CEO warned that stablecoins have become a vital part of payment and capital markets infrastructure, and regulating them as experimental products will delay their adoption.