The Bank of England will not lift proposed limits on stablecoin holdings until it is satisfied that the digital assets no longer threaten financial stability, Deputy Governor Sarah Breeden said in a speech on Wednesday.
The BoE’s proposed rules would restrict individuals to holding between £10,000 and £20,000 in stablecoins, with higher limits for businesses. These caps, Breeden said, are necessary to prevent rapid deposit outflows from banks into stablecoins that could cause a sharp contraction in credit for households and firms.
The crypto industry has criticized the plan as overly restrictive, but the central bank insists caution is vital. Breeden added that the BoE intends to lift the limits “once the transition no longer threatens financing for the real economy.” Large corporations are expected to be exempt to facilitate payment and liquidity needs.
The BoE will outline its updated regulatory approach in a consultation next month. Under the framework, the central bank will supervise systemic sterling stablecoins, while the Financial Conduct Authority (FCA) will regulate the rest. Work is also underway with the Treasury to establish a resolution regime to protect coinholders in case of issuer failure.
Breeden defended the UK’s pace of crypto regulation, saying it remains on track to complete its framework by 2026, keeping pace with U.S. efforts.
