The UK House of Lords released a 71-page report on stablecoin regulation, criticizing the current regulatory proposals for lacking competitiveness

According to a report titled "Stablecoins: Waiting for Regulation" released by the UK House of Lords Financial Services Regulatory Committee, the global market capitalization of stablecoins has exceeded $310 billion, but the UK pound stablecoin market is still in its infancy, and the construction of the regulatory framework is clearly lagging behind the United States (GENIUS Act) and the European Union (MiCAR).

The report criticizes several aspects of the current regulatory proposals from the UK Financial Conduct Authority (FCA) and the Bank of England, focusing on:

• The Bank of England's requirement for systemic stablecoin issuers to deposit at least 40% of reserve assets in non-interest-bearing central bank deposits, which the industry believes will severely harm issuers' profitability and the international competitiveness of the UK market;

• The proposed holding limits (individual £20,000, corporate £10 million) are considered extremely difficult to implement and may stifle the development of the pound stablecoin market;

• The T+1 redemption requirement will impose a significant operational burden on issuers;

• The Prudential Regulation Authority (PRA) restrictions on deposit-taking institutions issuing stablecoins under independent brands are deemed overly stringent.

The report also acknowledges the liquidity support loan mechanism proposed by the Bank of England, considering it an innovative regulatory measure that surpasses other major jurisdictions. The committee calls on regulatory agencies to strictly adhere to the established timeline, ensuring that the complete regulatory framework comes into effect as scheduled on October 25, 2027, and recommends adopting a principle-based, technology-neutral regulatory approach to achieve a reasonable balance between financial stability and market innovation.