TL;DR
- The Bank of England is considering placing caps on stablecoin holdings for individuals and businesses, sparking resistance from crypto advocates.
- Industry voices warn the plan could discourage adoption, hurt UK competitiveness, and prove nearly impossible to enforce.
- Meanwhile, other global regions are taking more open approaches, raising fears that restrictive rules will push innovation and investment away from Britain.
The Bank of England has unveiled a proposal to restrict how much stablecoin individuals and corporations can hold. Suggested limits range from £10,000 to £20,000 for individuals and up to £10 million for businesses. The plan, coordinated with the Financial Conduct Authority, aims to regulate tokens pegged to traditional currencies as their use in payments grows.
Many within the crypto sector see the move as counterproductive. Tom Duff Gordon, Vice President of International Policy at Coinbase, stated that caps would be negative for UK savers, the financial sector, and the role of sterling in global markets. Critics stress that no other leading jurisdiction has imposed such limits, highlighting the UK as an outlier.
Bank Defends Move As A Protective Measure
The Bank of England insists its position is based on concerns that widespread use of stablecoins could divert deposits away from traditional banks, potentially straining financial stability. Officials suggest that restrictions could be temporary, easing once the market matures and risks are better understood.
Yet industry groups say the enforcement of caps is highly impractical. Simon Jennings, Executive Director of the UK Cryptoasset Business Council, emphasized that tracking holders of decentralized tokens would demand expensive monitoring systems or digital IDs. He added that such requirements could impose heavy compliance burdens while undermining user privacy.
Global Approaches Highlight UK Risks
The central bank’s proposal risks clashing with the Treasury, which has voiced support for digital innovation in finance. Chancellor Rachel Reeves has recently pushed for expanding blockchain applications, including tokenized securities and stablecoin infrastructure.
Elsewhere, the United States has introduced legislation designed to integrate stablecoins into the financial system, while the European Union’s MiCA framework establishes clear standards without ownership restrictions. Observers fear that the UK’s more restrictive stance could drive businesses and investors toward these more welcoming markets.
Stablecoins currently represent around $288 billion in value, with forecasts from Coinbase projecting the market could grow to $1.2 trillion by 2028. Proponents argue that these assets lower the cost of cross-border transfers and accelerate settlement times, boosting efficiency across the financial system.
The Bank of England plans to release a consultation later this year to refine its approach. However, industry leaders warn that unless the proposal changes, Britain risks missing out on the next wave of digital finance.
