The International Regulatory Strategy Group (IRSG) has submitted its response to the Bank of England’s consultation on a 'Proposed regulatory regime for sterling-denominated systemic stablecoins'.
As a joint venture between TheCityUK and the City of London Corporation, the IRSG supports the creation of a proportionate and globally competitive framework for sterling-denominated systemic stablecoins.
Thank you to Clifford Chance LLP for their support in drafting this response.
Key points from our response:
- Transition arrangements – Clear, practical processes as stablecoins move from non-systemic to systemic status.
- Backing assets – More clarity on liquidity management, repo use, and cash treatment; flexibility encouraged.
- Prudential requirements – Enable regulated firms to leverage existing operational risk frameworks.
- Holding limits – Clear guidance on monitoring, breaches, and technical implementation for workable limits.
- Safeguarding assets – Use an outcomes-based approach; avoid separate regimes for systemic vs. non-systemic stablecoins.
- Systemic status thresholds – Objective criteria or indicative monetary limits would provide early warning for regulatory planning.
- Multi-jurisdiction issuance – Greater clarity on treatment and fungibility of sterling-denominated stablecoins issued outside the UK.
- Cross-cutting issues – Ensure clear framework boundaries, interoperability, distributed ledger technology settlement finality, and coordination between HM Treasury, Financial Conduct Authority, and Bank of England.