BoE Reconsiders Stablecoin Caps Amid Regulatory Pressure
The Bank of England (BoE) is reportedly reassessing its proposed caps on stablecoin holdings, signaling a more flexible approach following criticism from digital asset firms and financial institutions. According to recent reports, the central bank may allow exemptions for corporations that require larger reserves of fiat-pegged assets for operational and liquidity purposes.
The shift comes after intense industry pushback against the BoE’s initial proposal, which sought to limit stablecoin holdings to £20,000 (about $27,000) for individuals and £10 million for companies. These restrictions, designed to reduce systemic risks and maintain monetary control, were seen by crypto businesses as too restrictive for practical use.
“Such limits simply don’t work in practice,” said Simon Jennings of the UK Cryptoasset Business Council, arguing that trading and payment firms need access to substantial stablecoin reserves to function efficiently.
Balancing Stability and Innovation
The BoE’s evolving stance reflects the UK’s challenge in balancing financial stability with innovation in the growing stablecoin ecosystem, which has become integral to global digital finance.
Governor Andrew Bailey, once a vocal critic of private stablecoins, recently acknowledged that these assets could “coexist with traditional finance” and play a constructive role in the broader financial system — signaling a potential policy shift.
Industry insiders suggest the move is partly motivated by international competition, particularly from the United States, where the GENIUS Act, signed into law in July, has begun establishing clearer rules for digital assets.
Analysts note that the UK risks falling behind peers such as the U.S. and the European Union, both of which have advanced regulatory frameworks aimed at attracting fintech and blockchain innovation.
Global Stablecoin Market Surpasses $314 Billion
The global stablecoin market has expanded rapidly, now valued at approximately $314 billion, with most tokens pegged to the U.S. dollar. However, pound-backed stablecoins remain underdeveloped, with less than $1 million in total circulation, according to DefiLlama data.
Despite regulatory caution, the industry’s outlook remains optimistic. Tether co-founder Reeve Collins predicted that “all currencies will eventually exist in stablecoin form,” possibly by 2030, driven by tokenization and the growing efficiency of blockchain settlement systems.
As the BoE refines its approach, policymakers are under pressure to craft a regulatory model that safeguards the economy without stifling innovation. The potential relaxation of stablecoin caps suggests that the UK is moving toward a more pragmatic, market-aligned framework — one that could support digital finance growth while maintaining systemic security and consumer trust.
If successful, this balance could help the UK reclaim a leading position in global fintech, positioning London as a key hub for stablecoin adoption and digital asset innovation.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.