UK lawmakers urge Bank of England to soften planned rules on stablecoins.

LONDON, June 3 (Reuters) - British ⁠lawmakers urged the Bank of England on Wednesday to soften planned ⁠rules on stablecoins, warning that overly strict requirements could hinder ‌the development of a nascent sterling-backed market. A cross-party House of Lords committee said the central bank should reconsider proposals to cap the amount of stablecoins held by individuals and businesses and require issuers to back tokens ⁠with non-interest-bearing deposits. Stablecoins are a ⁠type of cryptoasset designed to hold a steady value, usually by being ⁠pegged ‌to a fiat currency. The market is dominated by U.S. dollar-linked tokens, while sterling-denominated stablecoins represent a tiny fraction of those ⁠in use. UK authorities aim to finalise stablecoin rules by the end ‌of the year, broadly in line with the U.S. "The Bank, [Financial ⁠Conduct Authority] and HM Treasury must recognise that the stablecoin market is nascent and growing, and adapt the regulatory regime as the market develops," the House of Lords Financial ⁠Services Regulation Committee said in a report. The BoE, whose rules will apply to "systemic" stablecoins – those that are widely used for everyday payments - has previously said its protections are necessary to head off ⁠a potential flight from bank deposits into stablecoins, which could cause a credit crunch. Committee chair Sheila Noakes, a Conservative lawmaker, told Reuters she was unconvinced the BoE had taken the right approach to address those concerns. The BoE should be open to "a principles-based, ⁠less prescriptive approach," the committee said. In a recent speech, BoE Deputy Governor Sarah Breedenhinted that the central bank was reconsidering ‌holding limits. A BoE spokesperson said its final policy and draft rules for systemic stablecoins would be published later in June. (Reporting by Phoebe SeersEditing by Alexandra Hudson)

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