UK MPs urge the Chancellor to question the Bank of England about the stablecoin plan

According to Bloomberg, a cross-party group of MPs in the UK has urged Chancellor of the Exchequer Rachel Reeves to oppose the Bank of England's proposal to set a cap on the amount of stablecoins held in the country, stating that the bank's policy would undermine the government's efforts to position the UK as a leader in the digital asset space.

In a letter to Reeves, members of the House of Lords, including CMC Markets Plc CEO Peter Cruddas, expressed that the Bank of England's plan to limit the amount of stablecoins individuals can hold would not reduce risk but rather drive capital overseas. The group wrote, "We are deeply concerned that the UK is gradually moving towards a fragmented and restrictive approach that will stifle innovation, limit adoption, and push activity offshore."

Last month, the Bank of England unveiled its proposed stablecoin rules, stating that it would temporarily set a cap of £20,000 (approximately $26,350) on individual stablecoin holdings and a cap of £10 million for businesses. The bank also requires issuers of tokens pegged to the pound to hold at least 40% of the reserves backing the token as interest-free deposits at the central bank. These proposals have been criticized by cryptocurrency companies, which argue that they are overly stringent.