Bank of England Reveals Why Stablecoin Limits Are Just ’Temporary Safeguards’

Central bank drops the real reason behind those pesky stablecoin restrictions.

The Temporary Shield

Threadneedle Street insiders confirm what crypto enthusiasts suspected all along—current stablecoin caps serve as interim protection while regulators play catch-up. The Bank of England admits these measures represent transitional controls, not permanent barriers.

Regulatory Treadmill

Traditional finance watchdogs scramble to keep pace with digital asset innovation. The temporary nature of these safeguards exposes the fundamental challenge: regulating technology that evolves faster than bureaucratic processes. Another classic case of financial dinosaurs trying to govern mammals.

Market Adaptation

While central bankers draft their next consultation paper, decentralized finance continues building. The 'temporary' label suggests what everyone knows—these limitations can't withstand market forces forever. Just like those 'temporary' bank bailouts from 2008 that somehow became permanent fixtures.

Key Takeaways

Why are these stablecoin limits being proposed?

Deputy Governor Sarah Breeden said unchecked outflows into stablecoins could cause a “precipitous drop in credit for businesses and households.”

What are the proposed limits for individuals and businesses?

Individuals could be limited to £10,000–£20,000 ($13,300–$26,600), while businesses may have higher thresholds.

In a recent turn of events, the Bank of England (BoE) has pushed out a major update circulating stablecoins.

The BoE signaled that its proposed limits on stablecoin holdings and transaction sizes will be temporary to safeguard financial stability.

Deputy Governor Sarah Breeden weighs in

Remarking on the same, Deputy Governor Sarah Breeden clarified that the measures, first outlined in a November 2023 discussion paper, aim to prevent large-scale, rapid outflows from bank deposits into stablecoins.

Although the crypto industry criticizes the caps as a potential barrier to innovation, the BoE insists that the restrictions protect the broader financial system.

She added that these limits WOULD stay until the transition to digital money no longer risked funding availability in the real economy.

“So let me be clear. We would expect to remove the limits once we see that the transition no longer threatens the provision of finance to the real economy.” 

Inside the proposed limits

She warned that unchecked outflows into stablecoins could trigger a “precipitous drop in credit for businesses and households” if banks cannot scale wholesale financing quickly enough.

The new proposal sets individual limits between £10,000 and £20,000 ($26,778), with higher thresholds for businesses, distinguishing the U.K. from other major economies.

Additionally, the BoE will launch a formal consultation on the updated regulatory framework, including limit levels, next month.

Yet, despite these challenges, the UK crypto sector cautiously welcomed the BoE’s openness to possible exemptions, urging the central bank to review and recalibrate the cap.

For instance, Simon Jennings, the Executive Director of the UK Cryptoasset Business Council, added, 

“While there are indications in the press that this policy may be under review, we believe it remains critically important that these limits are recalibrated.”

UK vs US stablecoin ecosystem

Now, the UK takes a cautious, phased approach, combining Financial Conduct Authority (FCA) regulations with BoE limits.

In contrast, the US, under the GENIUS Act, allows regulated banks and select issuers to launch fully reserved stablecoins. This further coincided with the US crypto industry pushing back against banks’ attempts to restrict stablecoin rewards.