Mark Cheng

Director, Communications and Ecosystem Engagement, Cleanverse International

[Simon Taylor @sytaylor]

JUST IN: The Bank of England is rethinking its stablecoin reserve requirements.

The BOE's original proposal was that issuers must park 40% of reserves at the central bank, earning zero interest. Then individuals would be capped at £20k holdings. Businesses at £10m.

Both the Payments Association and Innovate Finance called it a "chilling effect."

Thankfully, it looks like the BoE listened.

Deputy governor Sarah Breeden told the FT the rules were "overly conservative" and the BoE is "genuinely open" to alternatives.

But context REALLY matters here.

Last week ECB Chair Lagarde warned that even euro-denominated stablecoins threaten monetary sovereignty and financial stability. The ECB wants a digital euro by 2029 — and the message to private issuers is: we'd rather you didn't.

On Friday Bailey warned of a "coming wrestle" with the US over stablecoin standards. His concern: dollar stablecoins without direct redemption flooding into the UK during a crisis.

Two very different anxieties.

Lagarde fears stablecoins will undermine the euro. Bailey fears badly regulated ones will show up uninvited.

The fear is that the US floods the market with private stablecoins, and the ability to print money, and change interest rates is harmed.

The reality is that there's almost no domestic consumer stablecoin usage in the UK (or EU) today. It's almost entirely for cross border transactions The sovereignty threat that is a real risk for the global south nations barely applies to a freely floating G10 currency with deep capital markets and limited domestic adoption.

Stablecoins will actually *benefit* the UK if it leans into its position as a global FX hub.

Stablecoins in the UK are overwhelmingly a used as a cross-border settlement rail. And the BoE already laid out a path to direct RTGS access for systemic issuers — cutting settlement costs by up to 10x versus correspondent banking.

Stablecoins become a nonbank alternative to correspondent banking. Faster, cheaper, programmable.

This becomes another layer in the money stack, not a replacement, but an option.

It's not central bank money (true settlement)
It's not commercial bank money (deposits that fund lending)
Stablecoins are a faster-moving asset that works weekends.

Not equivalent to either central bank money or commercial bank deposits. Differentiated, useful, and they'll co-exist.

Three things to watch:

The BoE plans updated draft rules before end of June. The FCA is fast-tracking a stablecoin sandbox. And the GENIUS Act's implementation in the US will set the benchmark everyone else responds to.

Breeden's quote will be tested as these things happen: "We are keen to create a regime where stablecoins can succeed."

No major central banker in Europe is saying that right now.

Source: FT, The Block, CoinDesk

[a16z crypto @a16zcrypto]

https://t.co/5HWCyID7R0

[Mark Cheng @beatmastermark]

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[Mark Cheng @beatmastermark]

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[ST Business Desk @stbusinessdesk]

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[Mark Cheng @beatmastermark]

@dbs_care oh. ok thanks!

[Mark Cheng @beatmastermark]

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[Brian @litford]

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[Mark Cheng @beatmastermark]

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[Mark Cheng @beatmastermark]

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@dbsbank do you offer a balance transfer service for outstanding debts from other banks? Or is it purely from one DBS acct to another?

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