The Bank of England (BoE) has clarified that its plan to temporarily limit stablecoin holdings and transaction sizes is not a permanent restriction. The measure, according to Deputy Governor Sarah Breeden, is designed to maintain stability as the country adapts to the growing role of digital currencies in payment systems.
Speaking at DC Fintech Week, Breeden emphasized that the goal is to “support a role for stablecoins as part of a multi-money system”, while preventing sudden disruptions in credit flow to businesses and households.
The proposed restrictions, originally outlined in a 2023 discussion paper, suggested that individual holdings of stablecoins could be capped between £10,000 and £20,000 (approximately $13,400–$26,800).
Breeden explained that these measures are meant to give the banking sector time to adjust to the structural changes brought by stablecoins.
“We would expect to remove the limits once we see that the transition no longer threatens the provision of finance to the real economy,” she said.
She added that the restrictions will help the BoE monitor adoption trends and assess whether the system can handle large-scale stablecoin integration without risking liquidity or credit contraction.
Industry Response and Consultation Plan
Industry groups previously criticized the proposed limits, warning that they could stifle innovation and undermine the UK’s ambition to be a global hub for digital finance. Some analysts argued that strict thresholds could signal to startups that the UK is not crypto-friendly, potentially pushing innovation abroad.
In response, Breeden announced that the BoE will launch a consultation later this year, seeking feedback from financial institutions and fintech firms.
“We’ll be open to feedback as we finalize our rules,” she noted, confirming that exemptions for large businesses, supermarkets, and firms in the UK’s digital sandbox are under consideration.
Balancing Innovation and Credit Stability
The BoE’s primary concern, Breeden said, is the risk that rapid outflows from traditional banks into stablecoins could cause a “precipitous drop in credit for businesses and households.”
She emphasized that the transition must be gradual:
“Applying limits to a user’s holdings of a given systemic stablecoin is the best way to avoid a sudden reduction in credit availability.”
While the central bank aims to remain the main settlement authority for wholesale markets, Breeden acknowledged that regulated stablecoins and tokenized deposits will likely play a key role in future financial ecosystems.
The Bank of England’s clarification offers reassurance to market participants that its stablecoin policy is not anti-innovation, but rather a measured step toward safe integration.
As Breeden summarized, collaboration between regulators and the crypto industry will be essential to shape the UK’s evolving digital asset framework.
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.