GBP stablecoins poised for take-off after Lords urge regulatory reset
Agant's GBPA heads to market on June 8.
Aspiring GBP stablecoin issuers have welcomed a House of Lords report calling for a recalibration of the Bank of England’s proposed stablecoin regime, arguing that some of the central bank’s original requirements risked undermining the commercial viability of a nascent sterling stablecoin market.
In its report, Stablecoins: Waiting for Regulation, published on Wednesday, the House of Lords Financial Services Regulation Committee urged policymakers to reconsider several of the most contentious elements of the Bank’s framework, including the requirement for systemic stablecoin issuers to hold at least 40 percent of reserve assets in unremunerated Bank of England deposits, proposed temporary holding limits on stablecoins, and strict redemption requirements that industry participants say would impose significant operational burdens.
The committee warned that the UK risks falling behind international competitors if regulation is not sufficiently flexible to support innovation while maintaining financial stability.
“The regulators must be cognisant of the balance between the mitigation of risk and the viability of stablecoin issuer businesses, and hence on the development of a stablecoin market in the UK,” the report noted. “The Bank should consider the impact that requiring a proportion of unremunerated assets could have on the development of a GBP stablecoin market, and should set out details of the basis on which it has calculated the required proportions of unremunerated backing assets.”
The recommendations are unlikely to come as a surprise to market participants. Senior Bank of England officials had already signalled a willingness to engage with industry concerns and refine the framework following consultation, with growing recognition that overly restrictive rules could hamper the development of a domestic stablecoin ecosystem before it has had a chance to scale.
The report also argues that stablecoins could play an important role in the future of UK financial markets if the regulatory balance is struck correctly. “The UK has a mature and globally respected financial services industry, and its regulatory regime should be designed to allow a GBP stablecoin market to establish and grow, so that businesses can take advantage of the emerging opportunities this market could bring,” the committee said.
The findings came a day after Agant, one of a small group of firms seeking to establish sterling-backed stablecoins in the UK, announced a partnership with payments infrastructure provider Clear Junction. The House of Lords report identifies just two FCA-registered GBP stablecoin issuers currently active in the market — Agant and BCP Technologies, the issuer of tGBP — while four additional firms are exploring issuance through the FCA’s regulatory sandbox.
Under the arrangement, Clear Junction Digital will act as a distribution partner for Agant’s GBPA stablecoin, providing eligible institutional clients with access to issuance and redemption services and connecting fiat sterling payment flows to the token. Agant is preparing for its first live issuance, which Clear Junction chief executive Theresa Cameron told The Peg is scheduled to go live on June 8.
