The Bank of England is facing intensifying criticism over its proposed regulations on stablecoins, which would position the UK as the only major economy to impose strict caps on individual and business holdings of these digital assets. Industry leaders in the cryptocurrency sector have launched a unified campaign against the central bank’s plans, arguing that the restrictions would undermine London’s position as a leading global financial hub and stifle innovation in the burgeoning digital currency market.
Under the Bank of England’s recent proposal, individuals would be limited to holding between £10,000 and £20,000 in stablecoins, a type of cryptocurrency pegged to stable assets like fiat currencies or commodities to minimize volatility. Businesses, meanwhile, would face a cap of £10 million in stablecoin ownership. These unprecedented limits, which have no equivalent in other major economies, have sparked alarm among crypto firms and investors, who warn that the rules could drive investment and talent to more crypto-friendly jurisdictions.
Technical Nightmare Awaits Implementation
According to experts, the enforcement challenges alone present a formidable obstacle to the Bank of England’s ambitions. Simon Jennings from the UK Cryptoasset Business Council highlighted the practical impossibility of monitoring decentralized tokens.
“Stablecoin issuers don’t have sight of who holds their tokens at any given time,” Jennings explained, noting that implementation would demand costly new infrastructure including digital identity systems and constant wallet coordination. The complexity mirrors attempting to track physical cash ownership across millions of transactions daily.
Coinbase’s international policy chief Tom Duff Gordon delivered a scathing assessment, declaring the caps would harm British savers and sterling’s global standing. His criticism carries weight given Coinbase’s position as a leading exchange handling billions in daily trading volume.
Banking Stability Concerns Drive Restrictions
Bank of England officials defend the controversial measures as essential protection for Britain’s traditional banking system. Sasha Mills, the central bank’s financial market infrastructure director, argues that unrestricted stablecoin adoption could trigger massive deposit outflows from conventional banks, potentially strangling credit markets.
The central bank fears a scenario where consumers rapidly shift savings from traditional deposits into stablecoins, leaving banks without sufficient funds to maintain lending operations. Mills described the caps as a “transitional” measure, though officials have provided no timeline for removal.
This defensive posture contrasts sharply with approaches taken by major competitors. The U.S. passed the GENIUS Act in July, creating a comprehensive regulatory framework that integrates stablecoins into the official financial system without ownership restrictions. European regulators similarly implemented the Markets in Crypto-Assets Regulation, focusing on governance and reserves rather than limiting individual holdings.
The stablecoin debate also intensifies existing friction between Chancellor Rachel Reeves and Bank of England Governor Andrew Bailey. Reeves committed to advancing blockchain technology development in her Mansion House speech, positioning digital innovation as crucial for UK economic growth.
Global Market Dynamics Shift Without Britain
The global stablecoin market reached $288 billion in 2024, with industry projections suggesting growth to $1.2 trillion by 2028. This expansion occurs predominantly through U.S. dollar-denominated tokens, reinforcing American currency’s dominance in digital payments.
Professor Gilles Chemla from Imperial Business School warned that Britain risks squandering its historical advantages in financial innovation. “London has the talent, the markets, and the history to lead the digital economy,” Chemla observed, “but the delay in implementing a regulatory framework for stablecoins is eroding that advantage.”
Unless the UK acts swiftly to establish clear, innovation-friendly regulations, it may find itself not only trailing the U.S. but also side lined in shaping the future architecture of global finance. The opportunity to lead is still within reach—but the window is closing fast.
