The post Softening stablecoin stance could rattle UK credit markets, BoE deputy warns appeared on BitcoinEthereumNews.com.

If the UK softens its stance towards stablecoins, it could pose risks to financial stability and trigger a credit crunch, according to the Bank of England’s deputy governor, Sarah Breeden, who has recently defended the central bank’s proposed holding limits and liquidity rules for stablecoin issuers. Summary BoE deputy Sarah Breeden says strict stablecoin rules are necessary to preserve economic stability. The central bank has proposed stablecoin holding limitations, which critics argue could drive away innovation. Speaking to Reuters, Breeden touched upon how the UK’s approach was necessarily more cautious when placed side by side with the U.S., because of a “different set of risks” tied to the country’s heavy reliance on bank lending and the structural adjustments needed to accommodate this “new form of money.” Breeden’s comments come in response to mounting industry backlash over the stringent proposals that the central bank unveiled earlier this week, after several years of consultation and debate around how stablecoins should fit into the UK’s financial system. On Monday, the BoE unveiled the UK’s first formal regulatory framework for stablecoins, but placed a cap of 20,000 pounds on individual holdings and 10 million pounds for businesses. If that wasn’t enough, the proposal also requires issuers to keep 40% of their reserve assets in non-interest-bearing deposits at the central bank. Breeden said that protections like the 40% deposit rule were “grounded” in past incidents that highlighted systemic vulnerabilities. She specifically highlighted the collapse of Silicon Valley Bank back in 2023, when Circle’s USDC lost its peg after billions in reserves were frozen. Further defending the restrictions, Breeden said the rules can potentially “halve the stress” on banks by limiting large outflows of deposits that might otherwise be used to purchase stablecoins, thereby cushioning the impact on credit creation and lending activity across the country.…

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Filed under: News - @ November 12, 2025 7:28 am