Bank of England’s Stablecoin Cap Plan Sparks Crypto Industry Backlash

Regulatory clampdown meets digital defiance as traditional finance tries to rein in crypto's wild west.

The Backlash Begins

Crypto exchanges and stablecoin issuers blast the proposed limits as innovation-stifling overreach. They argue caps will push trading offshore and hurt UK competitiveness—just when digital assets were gaining mainstream traction.

Old Guard vs New Money

Threadneedle Street's risk-averse approach clashes with crypto's breakneck pace. The sector fires back: 'You can't regulate what you don't understand.' Meanwhile, traders shrug and keep stacking stablecoins—because nothing says 'financial stability' like arbitrary limits dreamed up by people who still think cheques are cutting-edge.

The inevitable outcome? More innovation happening beyond regulators' reach—while they're busy rearranging deck chairs on the Titanic.

BoE Defends Plan as Safeguard Against Banking System Risks

Industry groups argue the approach is unnecessarily heavy-handed. Tom Duff Gordon, vice-president of international policy at Coinbase, told the Financial Times that imposing caps WOULD be “bad for UK savers, bad for the City and bad for sterling.”

He pointed out that no other major jurisdiction has chosen to restrict ownership in this way.

The central bank’s caution reflects concerns that widespread use of stablecoins could drain deposits from traditional banks and weaken the financial system. Officials insist the limits could be transitional while the market adjusts to the rise of digital money.

But crypto executives warn the plan would be almost impossible to enforce. Simon Jennings, executive director of the UK Cryptoasset Business Council, said stablecoin issuers cannot monitor who holds their tokens at any given time.

Central Bank Stance at Odds With Treasury’s Pro-Innovation Agenda

Enforcing caps, he argued, would require complex and costly systems such as digital IDs or constant coordination between wallets.

The proposal threatens to deepen tensions between the Bank of England and the Treasury, which has signalled support for digital innovation in financial services. Chancellor Rachel Reeves said in July she wanted to drive forward developments in blockchain technology, including tokenized securities and stablecoins.

Critics say the central bank’s approach contrasts sharply with the US, where Congress passed the GENIUS Act this summer, embedding stablecoins more firmly into the financial system. The European Union has also introduced a comprehensive regime under its MiCA rules without resorting to ownership caps.

Stablecoin Market Nears $288B, Projected to Top $1.2 Trillion

The stablecoin market is now a fast-growing part of global finance. It is valued at around $288b. Most of that value comes from dollar-based tokens. Looking ahead, Coinbase has forecast the sector could expand to US$1.2 trillion by 2028.

For UK firms, the concern is clear. They fear that limits on ownership will curb adoption. As a result, business could shift overseas. Meanwhile, supporters of stablecoins argue the opposite. They say the tokens can cut the cost and time of cross-border payments. They also believe stablecoins will drive wider innovation in financial services.

The Bank of England plans to publish a consultation later this year. It will outline its updated approach to regulating stablecoins. However, industry representatives are already urging the bank to reconsider.

They warn that without more flexible rules, Britain could fall behind. In their view, the global race to regulate and embrace digital assets will leave the UK trailing if the current plan stands.