The Bank of England has been heavily criticized for its plans to clamp down on stablecoins. Photo: CryptoSlate
BOE's controversial proposal
- According to the Financial Times (FT) , the Bank of England (BOE) is facing a wave of fierce opposition from the cryptocurrency community, after proposing to apply a limit on stablecoin holdings for both individuals and businesses.
- The BOE intends to cap systemic stablecoins - that is, Token that are already or are expected to be widely used in payments in the UK. Accordingly:
Individuals: can only hold a maximum of £10,000-20,000 (equivalent to $13,600-27,200);
Business: limited to £10 million ($13.6 million).
- The BOE argues that these restrictions are intended to prevent deposits from flowing out of the banking system, which could undermine the ability to provide credit and threaten the country's financial stability.
- Sasha Mills, executive director of financial market infrastructure at the BOE, said the cap would help reduce the risk of sudden withdrawals of deposits, as well as limit the risk of new systemic payment systems expanding in scale.
- The BOE XEM this provision as a temporary measure to manage the financial transition period. Therefore, there is still a possibility that the BOE may relax or remove the limit in the future when the market has developed more stably.
Crypto industry backlash
- However, crypto industry leaders say the plan is unfeasible and will leave the UK behind:
Tom Duff Gordon, Coinbase's vice president of international policy, said that capping stablecoins is bad for UK savers, London and the pound, and stressed that no major market has imposed such a limit.
Simon Jennings, representative of the UK Digital Asset Business Council, warned that this regulation would be almost impossible to implement without new infrastructure such as digital ID, because stablecoins are global and transactions can easily go beyond the UK.
Riccardo Tordera-Ricchi from the Payments Association said the cap was absurd, as cash and bank accounts are currently unrestricted.
- Another factor is the disagreement between the BOE and the UK Treasury. While the BOE emphasizes systemic risk and prioritizes protecting financial stability, the Treasury wants to create conditions for the UK to become a hub for fintech innovation. The proposal to cap stablecoins is therefore becoming the center of policy debate between the two agencies.
Strict requirements in UK
- Along with the holding ceiling, draft regulations from the BOE and FCA also put forth a series of strict requirements for stablecoins issued in the UK :
Backing assets must be of high quality and liquidation .
Reserve assets must be segregated, independently deposited and confirmed daily.
The issuer is obligated to redeem (exchange for cash) quickly, usually within one business day.
Clear governance and liability model, with strong fiduciary obligations.
- This means that the cost of issuing stablecoins in the UK will be significantly higher, causing many businesses to consider moving their operations to other markets.
- In another direction, the UK also requires crypto companies to report all customer transactions , including personal information and transfer details, from January 1, 2026.
- While the BOE wants to tighten stablecoins, the US and the European Union (EU) are taking the opposite stance.
In the US, last July, the government enacted the GENIUS Act , establishing a federal framework for payment stablecoins. The law provides for licensing, reserves, and redemption rights, but does not impose holding limits.
The EU has also implemented MiCA regulations , which are now in effect across the bloc: Regulations for stablecoins apply from 30/06/2024; Broader regulations for crypto assets and related services from 30/12/2024. Like the US, MiCA focuses on reserves, governance and supervision, and does not impose ownership limits on stablecoins.
Coin68 synthesis
