If businesses are subject to stablecoin holding limits, then stablecoins can't be used for corporate cash management. There are more use-cases in the world than 'retail' and 'wholesale'.
🪙 📰 The Bank of England plans to grant exemptions to proposed limits on stablecoin holdings by businesses, indicating a softening stance toward cryptoassets amid growing competition from the US. 💡 The UK central bank intends to grant waivers to certain firms, such as crypto exchanges that need to hold large amounts of stablecoins, according to a person familiar with the matter. The BOE will also allow firms to use stablecoins as a settlement asset in its experimental Digital Securities Sandbox, people familiar with the matter said. BOE officials have faced fierce push back over the planned stablecoin caps, with the industry warning that any limits on holdings will be difficult to enforce. Many in the digital payments industry have voiced concerns to BOE officials, flagging that the UK may struggle to compete with the Trump administration’s Genius Act, which sets rules around dollar-backed stablecoins. Some stats: Of the roughly $303 billion worth of stablecoins in circulation, only $581,000 worth of tokens are pegged to the British pound. 📉 Read more in scoop below w/Tom Rees + Emily Nicolle With thoughts on the regulatory/policy environment for stablecoins in the UK from Sean Kiernan Jannah Patchay and Tony McLaughlin
If anyone can explain how holding limits would work in practice I would be very interested to hear it because I cannot wrap my head around any remotely reasonable implementation.
Olaf Ransome
1w
Tony McLaughlin. I need some help to pick apart the dynamics at play here. Here is what I am thinking and I'd love to get your steer on whether I am anywhere close to the issues: 1. A very general statement is that if we look at stablecoins like travellers' cheques, then we should let folks hold all the stablecoins they want 2. If a regulated bank issues a stablecoin, then in first place, holders of that coin have an unsecured claim on the bank 3. If a regulated bank issues a regulated stablecoin, then, using US Genius Act as a guide, it has to ring fence assets to enable 100% backing. So, this is like an MMF Then things can get tricky. IIUC, the US approach says Stablecoin issuers don't get reserve accounts at the Fed. This neatly supports management of monetary policy by controlling who has access to the "risk free" asset of balances at a central bank. Regulators should then police that the ring-fencng is sound, same as they do for broker-dealers under 15c3, and worry about any systemic risk because the coin like an MMF is just really, really big. Then along comes Mr Bailey at the BoE and says, I think, Stablecoin issuers could have accounts with the BoE but then holdings would be limited.
Risk Executive | Digital Assets & Stablecoin solutions | Asset Management & Tokenization | Board Advisor & Independent Fund Director
6dCouldn't the corporate just hold its balance in tokenized MMFs, those can be converted to stablecoins in seconds - thereby serving treasury with the digital version of a checking/savings account.