UK Crypto Industry Criticizes Bank of England's Stablecoin Cap Plan

By: Eva Baxter

The Bank of England's recent proposal to set a cap on individual stablecoin holdings has been met with criticism from UK cryptocurrency industry advocacy groups. The bank outlined intentions to limit digital pound holdings between £10,000 ($13,558) and £20,000, suggesting a possible lower threshold of £5,000. Industry stakeholders have expressed concerns over the feasibility and economic implications of these proposed restrictions.

In a detailed discussion paper published in November 2023, the Bank of England invited feedback on the plan, arguing that it would help mitigate risks. However, financial organizations like Coinbase and other prominent UK-based crypto associations argued that the proposed caps are cost-prohibitive and complex to enforce. They pointed out that such limitations could potentially leave the UK lagging behind other major economies like the US and the EU, where digital asset regulation is progressing more dynamically.

Critics highlighted that the proposed caps might deter innovation and the growth of the digital currency space in the UK. There is concern that by imposing strict limits, the UK may inadvertently stifle competitive advantage and innovation in a rapidly evolving sector. This situation poses a challenge for the UK to balance regulation with supportive measures to foster digital currency growth.

As the global financial landscape embraces digital assets, the UK's stance on stablecoin regulation will be crucial in determining its position in the financial technology sector. The Bank of England's engagement with industry participants highlights the importance of collaborative approaches to develop regulatory frameworks that protect consumers while promoting innovation.