Crypto Sector Pushes Back Against Bank of England’s Stablecoin Cap Plan

The Bank of England (BoE) faced sharp criticism from the cryptocurrency sector over its proposed caps on stablecoin holdings, aimed at safeguarding UK financial stability. The plan, targeting systemic stablecoins used widely for payments, suggests limits of £10,000–£20,000 ($13,600–$27,200) for individuals and £10 million ($13.6 million) for businesses, sparking fears of stifled innovation.

The BoE argues that unrestricted stablecoin use could drain bank deposits, threatening credit provision and economic stability. Sasha Mills, BoE’s executive director for financial market infrastructure, emphasized mitigating risks from sudden deposit withdrawals. However, crypto leaders, including Tom Duff Gordon of Coinbase, condemned the caps as “bad for UK savers, the City, and sterling,” noting no other major jurisdiction, like the US or EU, imposes such limits. The US GENIUS Act and EU’s MiCA framework focus on reserves and governance without restricting holdings.

Simon Jennings of the UK Cryptoasset Business Council called enforcement “nearly impossible” without costly systems like digital IDs. Riccardo Tordera-Ricchi of The Payments Association argued that caps are illogical when cash and bank accounts face no such limits. Industry groups warn that the policy could drive crypto firms to jurisdictions like Singapore or Hong Kong, undermining the UK’s goal to be a global crypto hub.

The BoE plans a consultation later in 2025 to refine its approach, but critics urge flexibility to avoid hampering DeFi growth and liquidity. With stablecoins pivotal to digital finance, balancing regulation with innovation remains critical.