The Bank of England’s proposed restrictions for stablecoins will be temporary, according to Deputy Governor Sarah Breeden, who has clarified that the central bank is simply concerned about the potential impact on the country’s financial system.
Summary
- Bank of England Deputy Governor Sarah Breeden said the proposed limits on stablecoin holdings will be temporary measures.
- The central banker said the caps are designed to mitigate outflows from the banking sector.
- A consultation will be launched by the end of 2025 to refine the rules.
Speaking at the DC Fintech Week on Oct. 15, Breeden addressed industry concerns over the central bank’s proposal to place a limit on individual stablecoin holdings between £10,000 and £20,000 per person, and up to £10 million per business, for all systemic stablecoins in circulation.
First announced in late November, the proposed limits were framed as a means to mitigate financial stability risks tied to large and rapid outflows of deposits from the banking sector, which could disrupt access to credit for households and businesses if the system fails to adjust in time.
Critics of the proposal argue that the decision could undermine the UK’s ambitions to become a global hub for digital assets. They warned that such limits on stablecoin use may drive innovation and investment toward more accommodating jurisdictions, as the UK was the only major jurisdiction to be considering such a move.
However, according to Breeden, the restrictions are only temporary, and the bank wants to leverage stablecoins for “retail and wholesale payments.”
“We want to support such a role for stablecoins as part of a multi-money system. And while, to date, proposals for stablecoins to be used for these purposes are yet really to take off, we know from other areas of tech innovation how quickly new products can grow, particularly where network effects are large, and where they can harness large existing user bases.”
Breeden said the central bank’s proposed measures are expected to allow the structure of real-economy financing to gradually adjust to the presence of stablecoins, and “enable the Bank to monitor adoption of stablecoins and assess the potential for rapid changes in the structure of the financial system.”
“We would expect to remove the limits once we see that the transition no longer threatens the provision of finance to the real economy,” Breeden added.
Breeden also stressed that regulating the “dynamic” stablecoin market may be challenging, but the bank has been working to establish a regulatory regime for stablecoins that is “fit for the future.”
“Such a regime will allow those stablecoin firms who want to innovate by providing better payment services to users to understand the risks that need to be managed as they develop those products – and ensure that innovation is not simply competing by taking higher financial, operational, or conduct risks.”
According to her, the BOE is expected to launch a consultation before the end of 2025 to seek feedback on the proposed holding limits, possible exemptions for larger businesses, and practical approaches to implementation.
“We also intend to seek feedback on implementing such limits in practice, as well as on other approaches to achieving our aims.”
Bank of England governor Andrew Bailey is a longtime crypto skeptic and has warned that stablecoins threaten the very nature of money if not properly regulated.
