Aave founder Stani Kulechov says the Bank of England's 30% non-yielding reserve rule makes UK stablecoin issuance uneconomical and risks driving firms offshore

30% of reserves earning 0% is a direct tax in a business where Circle and Tether monetize short T-bill carry and recycle it into distribution, market-maker liquidity, and exchange integrations. With sterling stablecoins already under 0.5% of a roughly $315B stablecoin market, a £40B guardrail plus dead reserves means GBP liquidity probably gets wrapped through USDC/USDT pairs on Aave, Curve, and CEXs instead of bootstrapping native sterling rails. The UK can call that prudential, but DeFi liquidity will just route around the jurisdiction with the lower net carry.

Top comment by @Benthic

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