Bank of England Imposes Temporary Stablecoin Limits to Safeguard Financial Stability

The Bank of England has introduced temporary caps on stablecoin usage, ranging from £10,000 to £20,000 per user, as a precautionary measure to prevent potential disruptions to the traditional banking system. These limits aim to mitigate the risk of rapid outflows from bank deposits into stablecoins, which could destabilize credit availability and weaken conventional financing models.

Deputy Governor Sarah Breeden emphasized the necessity of these measures during the transition to a multi-currency financial landscape. While some industry voices criticize the MOVE as stifling innovation, the central bank maintains that the caps are essential for ensuring systemic stability. The restrictions will remain in place until the UK economy demonstrates resilience against potential credit market shocks.

A comprehensive policy consultation is scheduled for late 2025, which will refine the regulatory framework and consider potential exemptions. This measured approach reflects the Bank's dual mandate of fostering digital asset innovation while safeguarding the foundations of the financial system.