By Phoebe Seers and Tommy Reggiori Wilkes

LONDON (Reuters) -Bank of England Deputy Governor Sarah Breeden on Tuesday warned that further diluting rules for stablecoins risked endangering financial stability and causing a credit crunch, and said that the UK needed a different approach to the United States.

The Bank of England on Monday set out a raft of new rules for systemic stablecoins – digital tokens designed to keep a constant value – used for payments. It marked a softening of its earlier approach, but the crypto industry said did not go far enough and could inhibit the growth of stablecoins in Britain.

Those rules include limiting stablecoin holdings to 20,000 pounds ($26,840) per person – which no other major jurisdiction does – and requiring stablecoin issuers to hold 40% of the

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