Circle’s Response to the Bank of England’s Consultation on Systemic Sterling Stablecoins

Circle Internet Financial has submitted its response to the Bank of England's consultation on a proposed regulatory framework for sterling-denominated systemic stablecoins, emphasizing the importance of balancing financial stability with innovation in payments. Circle supports the inclusion of central bank reserves as backing assets for stablecoin issuers to reduce counterparty risk but cautions against a fixed 40% requirement that could undermine commercial viability. The company advocates for principles-based redemption timelines, arguing against rigid end-of-day rules that may be operationally challenging. Circle also questions the practicality of holding limits, suggesting they could complicate market entry without significant financial stability benefits. Emphasizing the need for international coordination, Circle supports a deference framework for non-UK stablecoins to avoid duplicative regulation and promote cross-border interoperability. The response underscores the potential of regulated stablecoins to innovate wholesale financial markets, welcoming their inclusion in the Digital Securities Sandbox for experimentation and modernizing UK market infrastructure. Circle sees the Bank of England's engagement as crucial for maintaining the UK's status as a global financial leader while ensuring a competitive environment for stablecoin issuers.