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Crypto stablecoins might need limits to avoid disruptions to financial stability, warns Bank of England

Jon Cunliffe, deputy governor of the Bank of England, warned Monday that regulators may need to introduce limits on the use of stablecoins in payments to prevent potential threats to financial stability. Stablecoins are cryptocurrency tokens that aim to mirror the value of traditional assets such as fiat currencies, but regulators are concerned about the assets that underpin their value and the potential risks they may pose to the financial system. Volatility in the crypto markets raised questions about just how stable such tokens truly are after TerraUSD, a so-called algorithmic stablecoin, saw its value plummet to nearly zero cents when investors yanked out their funds due to fears over the technical model underpinning the token. There is currently no framework for consumers to be reimbursed in the event of a stablecoin failure, unlike commercial bank money which is protected by deposit insurance up to £85,000. Cunliffe said this reinforced the need to ensure the assets behind a stablecoin are "at all times of

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