SS #100 - Bank of England Softens Sterling Stablecoin Rules

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Good morning.

Facing industry revolt and the accelerating pace of US stablecoin legislation, the Bank of England is walking back a proposed framework that would have subjected sterling stablecoins to holding caps and a punishing 40% non-interest-bearing reserve requirement, raising questions about whether regulators can course-correct fast enough to keep dollar alternatives from dominating.

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In Today's Edition:

• Headline: Bank of England Softens Sterling Stablecoin Rules

• Quick Bites: Japan's Enterprise-led Blockchain to Issue Yen Stablecoin

• Yield of the Week: PT apyUSD's 18.9% APY

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HEADLINE

State of play: Facing industry pushback and growing pressure from US regulatory momentum, the Bank of England is reconsidering a framework critics say would have kneecapped sterling stablecoins before they ever scaled.

• The BoE's November proposal capped individual holdings at £20K, business holdings at £10M, and required systemic issuers to park 40% of reserves at the central bank interest-free.

• Deputy Governor Breeden acknowledged the framework may have been "overly conservative," with updated draft rules expected before end of June.

• The BoE is also considering lowering the 40% reserve requirement after industry pushed back on the drag it creates on yield-earning assets.

• Coinbase's Katie Harries warned holding caps risk becoming "a cap on innovation," backed by an 85,000-signature Stand With Crypto UK petition.

• BoE Governor Bailey separately warned of a "coming wrestle" with the US over international stablecoin standards as the GENIUS Act and Clarity Act advance.

What’s Next: Updated BoE draft rules expected before end of June, with a final framework later this year. The Clarity Act markup this week adds further pressure to move fast.

Why it Matters: If the GENIUS Act sets the global stablecoin baseline, restrictive frameworks risk pushing issuers and liquidity toward dollar-denominated alternatives.

Our Take: The BoE blinked under competitive pressure. The 40% non-interest-bearing reserve requirement was always a revenue-killer dressed up as prudential policy. The real test is whether the revised framework gives sterling stablecoins a genuine path to scale.

QUICK BITES

• Stablecoin-powered neobank Fasset raises $51M.

• GSR legal chief puts Clarity Act passage below 50% odds.

• Coinbase becomes Hyperliquid's official USDC treasury deployer.

• Sky Ecosystem leads $13.5M round for stablecoin yield startup Osero.

• Anchorage steps back from Robinhood & Kraken-backed stablecoin group.

• Bank of England set to ease sterling stablecoin rules amid industry concerns.

• Japan's enterprise-led blockchain to issue yen stablecoin for B2B settlements.

YIELD OF THE WEEK

PT apyUSD (apxUSD): 18.9% APY

• The market accepts apyUSD deposits and provides fixed-yield exposure to Apyx's yield-bearing stablecoin backed by DAT preferred share dividends, maturing June 18, 2026, while also earning 13x APYX Pips points.

• Capital is deployed into Apyx's vault with no leverage or rehypothecation, where 1 apyUSD converts to 1.36585 apxUSD at maturity via continuous exchange rate appreciation.

• Yield is generated from DAT preferred share dividends streamed on-chain into the vault, with the PT locking in a fixed 18.9% APY while YT holders capture remaining variable yield and points.

DeltaUSD HyperLiquid USDN Funding Arb: 18.99% APY

• The vault accepts USDT deposits and arbitrages funding rate differentials between SMARDEX perpetuals and Hyperliquid, going long on SMARDEX and short on Hyperliquid when rates favor the spread, with ~$1.03M in total deposits.

• Capital is deployed into delta-neutral positions across SMARDEX and Hyperliquid, dynamically switching between funding rate arbitrage and USDN minting to maximize capture of SMARDEX's funding rates.

• Yield is generated from funding rate spreads between the two perpetual markets, targeting 15-20% yearly yield at 0% management and performance fees.

Crosschain USD Vault (Third Eye): 15.62% APY

• The vault accepts USDC deposits and runs an opportunistic delta-neutral stablecoin strategy, currently allocated to MON and ENA basis trades across multiple chains, with ~$10.70M in total deposits and a 4-day withdrawal period.

• Capital is deployed across cross-chain MPC wallets managed by Third Eye via FordeFi custody, with subaccounts operating under strict whitelisted permissions across EVM, Sui, and Solana environments.

• Yield is generated from basis trade funding spreads and lending activity, with a current APY of 15.62% comprised of 9.24% deposit yield and 0.08% lending yield, net of a 10% performance fee.

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