Bank of England Proposes £20,000 Cap on Stablecoin Holdings

The Bank of England has unveiled a regulatory framework for sterling-denominated stablecoins, introducing temporary holding limits of £20,000 for individuals and £10 million for businesses. Deputy Governor Sarah Breeden emphasized the need for these restrictions to mitigate risks of rapid deposit outflows from commercial banks, which could destabilize credit availability. The caps are expected to be lifted once the transition no longer threatens the UK economy.

The consultation paper marks a pivotal move in shaping Britain's approach to digital assets with systemic risks. While Breeden assured the regime WOULD be operational soon, industry leaders criticized the limits as overly conservative compared to the U.S. approach under the GENIUS Act, which lacks ownership caps.

The proposed rules target systemic stablecoins—those widely used for payments—and will be jointly overseen by the Bank of England for prudential matters and the Financial Conduct Authority for consumer protection. The framework reflects a balance between fostering innovation and safeguarding financial stability.