TLDR
- Bank of England confirms proposed stablecoin holding limits are temporary measures, not permanent restrictions
- Individual users would face caps between $13,429-$26,858, with higher limits for businesses and possible exemptions for large companies
- Limits designed to prevent rapid bank withdrawals that could reduce credit availability for businesses and households
- Central bank will remove restrictions once financial system successfully adapts to stablecoin integration
- Public consultation launching before year-end to gather feedback on implementation details
The Bank of England has clarified its controversial stablecoin regulation plans. Deputy Governor Sarah Breeden announced the proposed holding limits will be temporary during a speech at DC Fintech Week.
The announcement addresses widespread criticism from the crypto industry. Many argued the restrictions would damage innovation and drive businesses away from the UK.
The central bank first introduced the concept in November 2023. The proposal would limit how much individuals and businesses can hold in sterling-backed stablecoins.
Individual users would face caps between 10,000 and 20,000 British pounds. That translates to roughly $13,429 to $26,858 at current exchange rates.
Businesses would receive higher limits than individual users. Large companies like supermarkets may get complete exemptions from the caps.
Why the Bank Wants Temporary Limits
The BOE fears rapid outflows from traditional banks into stablecoins. Such movements could reduce available credit for businesses and households.
Breeden explained the UK banking system relies more heavily on bank credit than the United States. This makes the transition period more sensitive for the British economy.
The temporary limits give the financial system time to adjust. The bank will monitor adoption rates and assess structural changes.
“We would expect to remove the limits once we see that the transition no longer threatens the provision of finance to the real economy,” Breeden stated.
The central bank wants to support stablecoins long-term. Officials view them as part of a future “multi-money system.”
Consultation and Implementation Timeline
The Bank of England will launch a public consultation before year-end. The consultation seeks industry feedback on limit levels and implementation methods.
Companies in the UK’s digital sandbox may receive special treatment. The sandbox launched in October 2024 for testing digital ledger technology.
The regulatory framework splits oversight between two agencies. The BOE will regulate systemic sterling stablecoins used widely for payments.
The Financial Conduct Authority will oversee other stablecoins. This agency proposed less strict rules for non-systemic coins.
The central bank is developing a resolution regime with the Treasury. This ensures service continuity if a stablecoin issuer fails.
Breeden rejected suggestions that Britain lags on crypto regulation. She said the BOE expects to finalize its framework in 2026.
The timeline matches targets set by US regulators. Both countries aim to establish comprehensive stablecoin rules next year.
Industry collaboration remains essential for success, according to Breeden. Both established firms and new entrants must work with regulators.
The temporary nature of the limits represents a compromise. The BOE balances financial stability concerns with support for crypto innovation.
Officials will evaluate when conditions allow removing the caps. The decision depends on how well the banking system adapts.
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