Cryptocurrency advocates are calling on the Bank of England to reconsider proposed regulations that would impose strict limits on the amount of stablecoins individuals and businesses can own. The Financial Times reported that these proposed caps could lead to the UK adopting a framework that is more restrictive than those in place in the United States and the European Union.
The Bank of England is considering imposing caps between £10,000 and £20,000 ($13,600–$27,200) for individual holders and approximately £10 million ($13.6 million) for businesses regarding all systemic stablecoins—tokens that are already widely used for payments in the UK or are anticipated to be in the future. Officials from the Bank argue that these restrictions are necessary to mitigate risks that could arise from potential outflows of deposits from banks, which could jeopardize financial stability and credit provisions.
Sasha Mills, the Bank’s executive director for financial market infrastructure, asserted that such limits would help address concerns over sudden withdrawals and the scaling of new systemic payment systems. However, industry representatives have expressed strong opposition to the proposed measures, arguing that they are impractical and could negatively impact the UK market.
Tom Duff Gordon, Vice President of International Policy at Coinbase, stated that these caps could harm UK savers and the broader economy, asserting that no other significant jurisdiction has implemented similar restrictions. Simon Jennings from the UK Cryptoasset Business Council added that enforcing these limits would be a challenge without introducing new systems, like digital IDs. Riccardo Tordera-Ricchi from The Payments Association also criticized the proposal, highlighting the absence of caps on cash or traditional bank accounts.
In contrast to the UK’s proposed regulations, the United States recently enacted the GENIUS Act, which establishes a federal framework for payment stablecoins. This legislation sets forth guidelines for licensing, reserves, and redemption standards without placing limits on individual holdings. The European Union, on the other hand, has advanced its own regulatory framework through the Markets in Crypto-Assets Regulation (MiCA), which became fully operational on June 30, 2024. Similar to the U.S. approach, MiCA focuses on reserves, governance, and regulatory oversight instead of imposing caps on holdings, aiming instead to facilitate a robust landscape for crypto-assets and services within the bloc.
As the Bank of England continues to evaluate its stance on stablecoins, the pressure from the cryptocurrency industry highlights a growing tension between regulation and innovation in the UK’s financial landscape.
