tl;dr
The Bank of England is facing opposition from cryptocurrency firms over proposed limits on stablecoin holdings. The BoE suggests caps of £10,000 to £20,000 for individuals and £10 million for businesses, arguing that the measures would prevent financial instability. However, industry leaders argue...
**Crypto Firms Clash with Bank of England Over Stablecoin Caps: A Battle for Financial Freedom**
The Bank of England (BoE) is facing a heated pushback from cryptocurrency groups after proposing strict limits on how much individuals and businesses can hold in stablecoins—digital tokens pegged to fiat currencies like the British pound. The Financial Times (FT) reported that industry leaders are warning the rules could leave the UK lagging behind the U.S. and EU in regulating this fast-evolving sector.
At the heart of the debate are proposed caps of £10,000 to £20,000 ($13,600–$27,200) for individuals and £10 million ($13.6 million) for businesses on systemic stablecoins, defined as tokens widely used for payments in the UK or expected to be. The BoE argues these limits are essential to prevent sudden bank deposit outflows that might destabilize credit systems. Sasha Mills, the BoE’s executive director for financial market infrastructure, told the FT the caps would “mitigate risks from sudden deposit withdrawals” and curb the rise of new payment systems that could challenge traditional banking.
But crypto firms and industry advocates are calling the plan unworkable. Tom Duff Gordon, Coinbase’s vice president of international policy, slammed the proposal as a move that would “harm UK savers, the City, and the pound,” noting no other major economy has imposed such limits. Simon Jennings of the UK cryptoasset business council added that enforcing the caps would be nearly impossible without overhauling systems like digital ID verification. Riccardo Tordera-Ricchi of The Payments Association called the restrictions nonsensical, pointing out that cash and bank accounts have no such limits.
The controversy highlights a global divide in stablecoin regulation. The U.S. has taken a different approach with the GENIUS Act, which sets licensing and reserve standards for stablecoins but avoids imposing individual holding caps. Similarly, the EU’s Markets in Crypto-Assets Regulation (MiCA), now fully active, focuses on reserves, governance, and oversight without restricting how much people can hold. Under MiCA, stablecoin-specific rules for asset-referenced and e-money tokens kicked in on June 30, 2024, with broader provisions for crypto-assets and service providers following on December 30, 2024.
As the BoE weighs its next steps, the clash underscores a fundamental question: Should regulators prioritize financial stability by limiting stablecoin use, or should they embrace innovation by aligning with global frameworks that avoid such restrictions? With the UK’s financial sector at a crossroads, the outcome could shape the future of digital money—and the UK’s standing in the global crypto economy.
What do you think? Are stablecoin caps a necessary safeguard, or a stifling barrier to innovation?