Quick Takeaways:
- UK’s central bank proposes stablecoin caps: £10k–£20k for individuals, £10m for businesses.
- Crypto firms warn the move could stifle growth and push innovation overseas.
- The UK’s stance now risks falling behind the US and EU on stablecoin regulation.
Stablecoin Rules Spark Concern Across Crypto Industry
The Bank of England’s new proposal to limit stablecoin holdings is making waves and not in a good way.
Under the suggested rules, individuals could be restricted to holding between £10,000 and £20,000 in stablecoins, while businesses would face a cap of £10 million.
These limits would apply to so-called “systemic stablecoins”, the kind expected to become widely used for payments.
Now, while the Bank says it’s just being cautious, the crypto industry sees a red flag. They argue the caps could block everyday people and businesses from fully participating in a growing financial ecosystem.
Instead of building a competitive digital finance hub, critics say this approach could push innovation away from the UK.
Stablecoin Limits Clash With UK’s Innovation Goals
Here’s the twist: the UK government says it wants to be a leader in digital finance. In fact, Chancellor Rachel Reeves recently doubled down on support for blockchain, tokenised securities, and yes, stablecoins.
But this proposal from the central bank seems to head in the opposite direction. Tom Duff Gordon, Vice President of International Policy at Coinbase, didn’t hold back.
He called the plan “bad for UK savers, bad for the City, and bad for sterling.” And he’s not alone in thinking that way. No other major country has introduced stablecoin ownership limits like this, not even close.
Therefore, if the UK really wants to lead in Crypto and Fintech, why is one of the most practical digital devices difficult to use?
In the meantime, other nations are progressing
While the UK debates limits, other countries are opening the door. The United States recently passed the GENIUS Act, which lays the foundation for stablecoins to become part of everyday financial life.
Over in the European Union, the MiCA regulation already creates a comprehensive framework for crypto assets, and it doesn’t include caps on stablecoin holdings.
These countries are saying: Let’s regulate the issuers, not punish the users.
That’s a big contrast to the UK’s current direction.
Enforcing Stablecoin Caps Could Be a Nightmare
Let’s say the UK goes ahead with these caps. How would that even work? That’s the question Simon Jennings, Executive Director of the UK Cryptoasset Business Council, is asking.
According to him, stablecoin issuers don’t actually know who holds their tokens, and that’s kind of the point of decentralised finance. To track and limit holdings, the UK would need complex digital identity systems, constant monitoring across wallets, and tight cooperation between platforms.
Not only will it be expensive and time consuming, but it can also increase serious privacy issues. And let’s be real – if the enforcement becomes very difficult or aggressive, then businesses and investors can simply go to smart, simple rules.
The Bank Says It’s About Safety, But For How Long?
To be fair, the Bank of England isn’t trying to kill crypto. They say the proposal is about keeping the financial system safe.
There’s real concern that if too many people move money into stablecoins, it could pull deposits away from traditional banks, creating risks they’re not ready for.
In that sense, the BoE sees these caps as a temporary guardrail, not a permanent roadblock.
But the industry is not confident. Eventually, the regulator uncertainty is poor for trade, especially in fast moving spaces such as crypto.
