The Bank of England said Monday it was modifying its framework to allow unrestricted use of stablecoins for households and businesses.
Stablecoins are a form of digital money whose value is stable in that it is pegged to that of fiat, or classic, money.
The central bank said last November it would place limit on the amounts of stablecoins that could be held: 20,000 pounds ($26,500) for individuals and 10 million limit for businesses.
After criticism from businesses, the Bank of England said Monday it would put in place a global limit of £40 billion for each stablecoin issued, which it said would be cheaper and easier to implement, allowing unrestricted use by household and businesses.
It added the guardrail will be reviewed regularly and removed once risks to credit provision have been addressed.
“This is a major milestone in delivering greater choice and innovation in UK payments,” said Sarah Breeden, the Bank of England’s deputy governor for financial stability.
Stablecoins are designed to provide low-cost, instant, and secure payments anywhere in the world.
The Bank of England also modified the percentages of assets that can be used to back the value of stablecoins.
Short-term government bonds can back up to 70 percent and non-interest-bearing deposits with the central bank 30 percent.
It previously recommended a 60-40 split.
The Bank of England will oversee pound-backed stablecoins the Treasury considers “systemic” while smaller tokens not backed by sterling will remain under the watch of the FCA markets regulator.
The central bank intends to finalise its stablecoin regulations by the end of the year so they may enter into force in 2027.
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