Stablecoin industry opposes Bank of England’s unhosted wallet ban
The crypto industry in the UK has come out against the Bank of England’s proposed policy that would ban custodial wallets for stablecoins.
The UK's stablecoin industry has voiced strong opposition to the Bank of England's proposed regulatory framework that would prohibit the use of unhosted wallets for stablecoin transactions. The central bank's consultation paper suggests restricting stablecoin usage to custodial wallets only, a move that has drawn criticism from major industry players and trade organizations across the crypto sector.
The proposed ban forms part of the Bank of England's broader regulatory approach to digital assets, aimed at addressing concerns over money laundering, terrorist financing, and consumer protection. Unhosted wallets, also known as self-custody wallets, allow users to control their own private keys without relying on third-party custodians. The central bank argues that limiting stablecoin usage to regulated custodial services would provide better oversight and compliance mechanisms.
Industry representatives argue that banning unhosted wallets would undermine the fundamental principles of decentralized finance and limit innovation in the UK's digital asset ecosystem. Critics warn that such restrictions could drive stablecoin activity offshore, potentially weakening London's position as a global financial hub and reducing the competitiveness of UK-based crypto businesses against international counterparts.
The Bank of England's consultation period remains open, with the final regulatory framework expected to be announced in the coming months. Industry stakeholders continue to lobby for alternative compliance solutions that would preserve self-custody options while addressing regulatory concerns.
Source: Cointelegraph
