TL;DR
- Coinbase urges UK authorities to reconsider proposed caps on sterling stablecoins, arguing they could limit adoption and weaken London’s fintech edge.
- The Bank of England has floated holding limits of £20,000 for individuals and £10 million for businesses.
- Executives say more flexible rules would support tokenized markets, strengthen the pound’s digital role, and keep crypto innovation in Britain rather than pushing activity offshore.
A senior Coinbase executive is pressing UK policymakers to revisit restrictions on sterling-backed stablecoins, warning that tight caps could undermine the country’s position in digital finance. The debate centers on how the UK structures oversight for fiat-referenced tokens as it seeks to balance financial stability with innovation after Brexit.
Tom Duff Gordon, Vice President for International Policy at Coinbase, addressed members of the House of Lords Financial Services Regulation Committee and argued that proposed limits risk constraining real-world use cases. The Bank of England has considered capping individual sterling stablecoin holdings at £20,000 and business balances at £10 million.
Duff Gordon said those thresholds may prevent stablecoins from functioning as settlement tools in wholesale markets. He pointed to the growth of tokenized bonds and short-term debt instruments, noting that digital cash equivalents are necessary to complete on-chain transactions efficiently. Without adequate scale, sterling-denominated tokens could struggle to compete with dollar-based stablecoins that already dominate global crypto liquidity.
The UK has advanced broader crypto legislation under the Financial Conduct Authority, which oversees registration and compliance for digital asset firms. Industry participants argue that regulatory clarity has improved, yet key details on stablecoin treatment remain under discussion.
Competitive Framework For Digital Sterling Innovation
Coinbase representatives called for adjustments that would allow issuers to hold a larger share of reserves in short-term UK government debt and to access central bank liquidity facilities during stress. They maintain that fully reserved stablecoins differ structurally from banks because they do not engage in maturity transformation.
The company also supports permitting regulated firms to offer incentives to stablecoin holders and enabling broader wholesale usage. Executives contend that such steps would lower cross-border payment costs and reinforce London’s role as a fintech hub competing with jurisdictions like Singapore and New York City.
The UK government has signaled its ambition to become a global crypto center, and policymakers are weighing how to integrate blockchain-based payments into existing financial plumbing. Market participants say proportionate guardrails can coexist with growth and financial stability.
If authorities recalibrate the caps, industry leaders believe sterling stablecoins could support capital markets activity and expand the pound’s digital footprint. The outcome of the consultation will shape how much of the next wave of crypto infrastructure develops within the UK rather than abroad.
