Tag Archives: rules

The Stablecoin Crossroads: Britain’s Choice Between Leadership and Irrelevance

The Stablecoin Crossroads: Britain’s Choice Between Leadership and Irrelevance

The United Kingdom stands at a crossroads. Bank of England officials now reconsider rules that could determine whether Britain leads or lags in the digital currency race. A House of Lords committee recently warned that overly strict regulations might strangle sterling stablecoins before they even take their first steps. This debate matters far more than most people realize.

The Pushback Against Conservative Rules

Deputy Governor Sarah Breeden admitted the central bank listens closely to industry concerns. She told reporters they examine alternative approaches with genuine openness. The original framework proposed capping individual holdings at £20,000 and requiring issuers to park 40 percent of reserves at the Bank of England without earning interest. Industry players called these rules unworkable. Now the BoE questions whether its initial thinking proved too conservative.

The House of Lords Financial Services Regulation Committee published a report that pulled no punches. Committee chair Sheila Noakes warned that nobody knows how a UK stablecoin market might develop. She emphasized that regulation shapes outcomes. The committee urged regulators to avoid applying a harsher risk lens to stablecoins than to other payment forms. This warning carries weight because the UK already trails the European Union and the United States.

Megan Greene, a member of the Bank’s Monetary Policy Committee, recently suggested stablecoins might become obsolete. She predicted tokenized deposits would take over within five years. Yet Noakes pushed back against this view. She argued that predicting the future trajectory of digital assets remains impossible. The UK cannot afford to bet wrong.

The Risk of Losing Global Competitiveness

Consider the strategic benefits of easing these rules. Britain faces real pressure from the EU’s Markets in Crypto-Assets framework, known as MiCA, which took full effect in 2024. The United States moves forward with the GENIUS Act, which President Trump signed into law in July 2025. This legislation requires full reserve backing and monthly disclosures. If Britain maintains punitive rules, issuers will simply choose other jurisdictions. The UK risks losing its position as a global financial center.

The current proposal demands that stablecoin issuers hold 40 percent of backing assets in unremunerated central bank deposits. This requirement eliminates any yield on a substantial portion of reserves. Issuers cannot build viable business models under such conditions. They need to earn returns on short-term government bonds to cover operational costs and remain competitive. Removing this mandate enables capital efficiency and allows the industry to function.

Low holding caps also create problems. The proposed £20,000 limit for retail users and £10 million for businesses prevents stablecoins from serving as serious settlement infrastructure. Large corporate treasury operations cannot function with such constraints. Removing these caps encourages businesses to use sterling stablecoins for high-value B2B transactions. This adoption drives market volume and brings institutional capital into the ecosystem.

A principles-based regulatory approach supports financial innovation. It gives companies room to develop new payment architectures without prescriptive rules constraining every move. The Financial Conduct Authority selected Revolut in February as one of four firms for its regulatory sandbox. This initiative explores how stablecoin offerings could operate under the proposed framework. Innovation needs space to breathe.

Balancing Systemic Risk and Financial Stability

Yet serious risks demand attention. Easing holding limits threatens deposit stability at traditional banks. During financial crises, retail deposits could migrate rapidly out of high-street banks into stablecoins. This flight destabilizes the banking system precisely when stability matters most. The 2008 financial crisis taught regulators that deposit runs can happen with terrifying speed.

If traditional bank deposits shrink, lenders face difficult choices. Banks might reduce lending to businesses and consumers. They could increase interest rates on loans to compensate for lost deposits. This squeeze affects ordinary people seeking mortgages or small businesses needing working capital. The broader economy feels these effects.

Contagion risk presents another concern. Stablecoin issuers typically back their tokens with commercial paper and other private market assets. Heavy reliance on these instruments exposes holders to broader market disruptions. When commercial paper markets freeze, as they did in March 2020 during the pandemic, stablecoin values could come under pressure. The European Central Bank and Bank for International Settlements have repeatedly flagged this disintermediation risk.

Shifting away from hard, prescriptive rules complicates supervision. Regulators must monitor real-time compliance rather than simply checking boxes. This approach places a heavier burden on oversight bodies. The Financial Conduct Authority already faces resource constraints. Adding complex, real-time monitoring of stablecoin issuers stretches these limits further.

The Stakes for Britain’s Economic Sovereignty

Tom Duff Gordon, formerly vice president for international policy at Coinbase, told the House of Lords committee that holding limits prevent sterling stablecoins from scaling into settlement infrastructure. His argument resonates with many industry participants. George Morris, a digital assets partner at Simmons & Simmons law firm, welcomed potential revisions but warned that broader Treasury and FCA proposals could still create obstacles. Merchants integrating payment layers for non-UK stablecoins might face full FCA authorization requirements.

The international context sharpens the urgency. The EU’s MiCA framework provides regulatory clarity that attracts businesses. The United States advances both the GENIUS Act and the broader CLARITY Act through Congress. The Senate Banking Committee scheduled markup sessions for this crypto market structure legislation. Britain cannot afford to watch from the sidelines while competitors build their digital asset ecosystems.

A sterling stablecoin offers genuine benefits. It provides fast, low-cost payment options and greater efficiency in settlements. It helps avoid monetary policy risks from currency substitution if UK users adopt US dollar-denominated stablecoins instead. These advantages matter for Britain’s economic sovereignty.

The Bank of England faces a delicate balancing act. It must protect financial stability while fostering innovation. It must learn from past crises without letting fear dictate every decision. The 40 percent reserve requirement reflected lessons from historical financial turmoil. Yet industry feedback suggests this approach might prove overly conservative. Breeden acknowledged that they assess whether alternative methods could achieve their objectives without crippling the industry.

No one knows whether a UK-based stablecoin market will flourish. The shape of any such market depends heavily on regulatory direction. The committee’s warning rings true. Regulation must allow innovation while effectively mitigating risks. It must not constrain use cases or make premature assumptions about which digital settlement solutions fit particular needs.

Britain stands at this crossroads now. The choices made in the coming months will echo for years. The Bank of England must find the path between excessive caution and reckless abandon. The stakes could not be higher.

Source:

https://www.securities.io/uk-stablecoin-regulation-bank-of-england/

 

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

From quantitative tightening to quantitative crypto: How policy shifts are rewriting market rules

From quantitative tightening to quantitative crypto: How policy shifts are rewriting market rules

The Federal Reserve’s less hawkish stance is acting as a catalyst for renewed investor confidence across both traditional and digital asset classes. This shift is occurring as part of a broader recalibration of macro expectations, liquidity dynamics, and institutional posture toward risk.

For those engaged in the evolution of financial systems, particularly at the intersection of decentralised infrastructure and macro policy, the current moment offers insight into how legacy market frameworks are beginning to accommodate the emerging crypto native paradigm, albeit cautiously.

The Fed’s latest policy update, which shows a more dovish tilt relative to earlier guidance, has brought a degree of optimism to markets already sensitive to changes in interest rate trajectories. The decision to implement a 25 basis point rate cut, along with a pause in quantitative tightening, signals that central authorities believe inflationary pressures may be easing enough to allow a recalibration of monetary policy.

This shift coincides with an increase in US initial jobless claims, which rose by 44,000 to 236,000 in the week ending December 6, 2025, exceeding forecasts. Such labour market softness strengthens the case for a more accommodative stance from the Fed, consistent with UOB’s projection of two rate reductions in the second and third quarters of 2026, bringing the Fed Funds Target Rate to 3.25 per cent by the end of 2026.

Equity markets showed a mixed reaction, reflecting relief over the Fed’s stance and caution regarding ongoing macro uncertainties. The Dow Jones rose 1.34 per cent, the S&P 500 gained 0.21 per cent, and the tech-heavy Nasdaq declined 0.26 per cent. This divergence suggests a rotation away from growth-oriented equities toward value and cyclical exposures. A similar dynamic is visible in crypto markets, where Bitcoin’s dominance has increased to 58.75 per cent.

Investors appear to be favouring established, large-cap digital assets as relatively safer options within a volatile risk landscape. This preference for perceived stability aligns with broader portfolio strategies that emphasise quality US equities while leaning toward non-US value and mid-cap exposures.

Fixed income markets also responded positively to the Fed’s policy shift, with US Treasury yields declining. The ten-year yield fell more than 1 basis point to 4.14 per cent, and the two-year yield dropped more than 3 basis points to 3.52 per cent. These movements indicate growing investor appetite for longer duration assets as yield differentials narrow and the path of future rate cuts becomes clearer. Bond yields are becoming attractive again from a strategic perspective, supporting allocations to high-quality fixed income as a counterbalance to equity and crypto volatility.

In foreign exchange markets, the US dollar weakened, with USD/JPY falling 0.3 per cent to 155.48 in its second consecutive session of decline. This weakness is consistent with expectations of further Japanese yen strength as the Bank of Japan signals plans to raise rates in December, narrowing the yield gap with the US.

In commodities, divergent trends emerged. Brent crude fell 1.49 per cent to close at US$61.28 per barrel as market attention shifted to potential progress in Russia-Ukraine peace discussions. Gold rose 1.2 per cent to US$2,880.08 per ounce, reinforcing its role as a defensive hedge in uncertain macro environments.

In Asia, regional equities mostly closed lower following the Fed’s rate cut announcement, though early trading showed mixed performance. The strategic outlook remains overweight on Chinese equities, using a barbell approach that combines exposure to tech innovators and high dividend plays.

Against this macro backdrop, the crypto market rose 2.28 per cent in the last 24 hours, maintaining a seven-day uptrend of 0.3 per cent, though still 9 per cent below its 30-day average. This rebound appears driven not by retail speculation but by institutional momentum and favourable liquidity conditions.

Binance continues to lead global Bitcoin trading volume with a 35.4 per cent share, reflecting its established infrastructure and role as a liquidity hub. More notably, JPMorgan’s execution of a debt deal on Solana during Breakpoint 2025 marks an important moment in institutional adoption of blockchain infrastructure beyond asset speculation. This suggests Solana can support more complex financial instruments, strengthening its credibility among traditional finance participants.

US Bitcoin ETFs recorded US$223 million in inflows, the highest in 20 days, indicating renewed institutional demand for regulated crypto exposure. These flows act as a gauge of professional investor sentiment and show that macro tailwinds are influencing capital allocation decisions. Bitcoin’s price action, however, remains closely tied to equity movements, with a 0.85 correlation to the S&P 500. This dependence highlights a vulnerability: despite gaining institutional legitimacy, crypto has not yet separated itself from traditional risk-on and risk-off dynamics. The recent drop in Bitcoin to US$109,000 during a tech sector selloff illustrates this.

Another factor is the sharp rise in derivatives leverage. Perpetual futures open interest increased 11.6 per cent to US$87.9 billion, while funding rates rose 102 per cent within 24 hours. Bitcoin liquidations reached US$95 million, with 77 per cent coming from short positions, indicating strong bullish momentum but also heightened risk of a leveraged long squeeze. The seven-day RSI of 53 suggests scope for further upside if momentum persists and macro conditions remain supportive.

In conclusion, the current rally reflects a combination of institutional engagement and macro liquidity. However, it continues to unfold within a structure still linked to traditional markets. The Fed’s shift provides short-term support, but sustainability depends on whether crypto can develop independent price drivers rooted in utility, adoption, and network effects.

Key levels to watch include Bitcoin’s US$93,000 resistance and the ETH/BTC ratio, which could indicate altcoin rotation. Solana’s ability to maintain institutional interest after Breakpoint will also be important. While conditions have improved, the market’s structural dependencies and elevated leverage call for cautious optimism rather than strong enthusiasm.

 

Source: https://e27.co/from-quantitative-tightening-to-quantitative-crypto-how-policy-shifts-are-rewriting-market-rules-20251212/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

Co-Creating the Rules: How Crypto Firms Are Shaping A Sustainable Future With Government

Co-Creating the Rules: How Crypto Firms Are Shaping A Sustainable Future With Government

The crypto world moves fast, with blockchain innovations popping up constantly while governments take their time to respond. As a member of Bitcoin class 2012/13, and having followed its wild rides and the crashes of major exchanges for more than a decade, I’ve noticed a real shift. Crypto firms are starting to view regulators not as enemies to dodge, but as allies in creating a stable and innovative ecosystem. This change feels like a key moment in the industry, especially now when global markets crave clear rules amid all the volatility, scandals, and crypto’s growing ties to traditional finance. In my opinion, proactively jumping in is essential for building legitimacy, driving growth, and avoiding the regulatory hurdles that have slowed progress in the past.

The industry’s approach to government relations has evolved significantly, focusing on shared wins rather than clashes. Crypto companies are acting as links, developing initiatives that match up with public goals like steady economies and protecting users. This involves sharing expertise on blockchain applications, participating in key discussions, and supporting government-connected initiatives, such as those from NGOs, schools, and think tanks. From where I sit, this teamwork gets at a basic fact. Governments are not out to kill crypto; they just protect against dangers like scams, money laundering, and wild market swings. By offering insights and tools, firms can clear up the tech’s mysteries, aiding officials in making smart rules rather than quick shutdowns. With crypto weaving deeper into everyday finance these days, this kind of alliance is crucial. Companies that connect early are not only cutting risks, but they are also helping set the standards.

A smart ladder of connections is taking shape in the sector, aiming at groups from top federal offices down to local city leaders, covering lawmakers, executive branches, and oversight bodies. This layered plan fits the patchy world of rules, where country-wide policies can bump against state or town-level actions. Outside official channels, efforts reach into schools, research groups, community organizations, global bodies, news outlets, advocacy teams, and legal pros. In the wary atmosphere after blowups like FTX, casting this wide web is key to earning trust. For example, think tanks and universities can churn out studies that sway laws, while media and nonprofits spread good stories. Crypto outfits are also nurturing projects tied to public groups and stepping in as fixers during troubles, which strikes me as a clever move toward real-world good. This full-spectrum outreach fights the idea of crypto as just a gamble, framing it as a way to boost access to money and spark new ideas.

Looking ahead, the sector’s step-by-step plans show why this method maps out wins. Companies are showcasing their setups, like research units, decentralized groups, and funding arms, to officials who often do not grasp the field deeply. Regulators I have talked to own up to those blind spots. By giving details on how things work and market info, firms teach without pushing sales, setting up for fair watchdogs. Jumping into open feedback sessions lets the industry shape new rules, like in worldwide drives for uniform systems. Getting hands-on in trade groups acts as a voice box, pulling in base-level views and spreading learning tools. Teaming with think tanks and schools to craft policy write-ups plants crypto views in debates, even if companies stay in the background.

Tactics for handling cross-office rules leverage crypto’s global reach, accelerating information exchanges beyond traditional paths. Showing up at big meetings not to hawk but to highlight pledges to good deeds, such as blockchain for public help, fits a pattern I have spotted. Authorities warm to players who put society first. Broadening outreach past buzz to local, rule-maker-friendly tales of business and charity work is way past due. The field’s current spin often comes off as inward-looking, skipping chances to spotlight true effects. Linking with advocates gives a push and previews, reading official steps quickly. Putting money and startup help into public aims tightens bonds, since joint interests breed commitment. Mingling with other players, from big outfits to legal crews, builds tough webs for growth or slumps. Launching these bit by bit, as constant work, mirrors the truth that ties are long hauls, not quick dashes.

The industry’s backup strategies highlight ongoing soft spots in this changing setup. When bad news hits, like lists of no-gos or tight reins, firms rally lawyers for straight talks with overseers, scoop local scoops, sync quick messages, and tweak things like ads. If lots of players get dinged, a joint push without spilling too many secrets can stand up to oversteps together. In calm spells, inside checks on stuff like partners and area rule-following keep things primed. From my spot, this readiness points out the fuzzy areas crypto still threads, but it also hints at hope. Through steady chats, firms can head off blowups and grow talks.

In pushing this forward-thinking way, I lean on proof that teamwork brings real upsides. For starters, sharper rule paths boost openness and steady checks, pulling in big-money backers and calming markets. These links foster setups that fire up new ideas while beefing up safety, faith, and money reach around the world. Officials zeroing in on user shields, safety, and honesty find overlap with sector aims, cutting down splits. Take cases like Coinbase, which teams with governments as a go-to crypto middleman, easing dives into the tech. Standard Chartered has joined crypto groups to roll out stablecoins, blending digital bits into banks. Even U.S. ideas for a country-wide Bitcoin stash show official hugs when sparked by sector tips. These back my case for linking up. The flip side, pushing back, has sparked shutdowns in spots like China and parts of Europe.

I stand strong for this path, even if it risks too much control, watering down crypto’s spread-out core. But right now, as crypto mixes into finance with cries for oversight, alliances are vital for growing up. As someone watching this arena, I figure copying these moves across the board could flip crypto from a rule pain to a base of world money flows. The trick is doing it right, mixing push with duty in shifting world plays. If handled well, the field will not just hang on, it will boom, helping creators, funders, and folks everywhere.

Source: https://www.benzinga.com/Opinion/25/11/48750239/co-creating-the-rules-how-crypto-firms-are-shaping-a-sustainable-future-with-government

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j