Bank of England Promises ‘Temporary’ Stablecoin Caps – But Sets No End Date

The Bank of England will impose “momentary” limits on stablecoin holdings to guard credit score availability, however has not specified when the caps will probably be lifted, Deputy Governor Sarah Breeden confirmed on Tuesday.

The central financial institution plans limits of £10,000-£20,000 for people and £10 million for companies on systemic stablecoins used for funds.

Breeden said, “we might count on to take away the boundaries as soon as we see that the transition not threatens the availability of finance to the actual economic system.”

However, the session paper arriving later this yr offers no timeline or metrics defining when that threshold could be met.

The strategy contrasts with the U.S., the place Congress passed the GENIUS Act in July, establishing federal stablecoin regulation with out possession caps.

Tom Duff Gordon, Vice President of International Policy at Coinbase, earlier told the Financial Times that “imposing caps on stablecoins is unhealthy for UK savers, unhealthy for the City and unhealthy for sterling,” noting that no different main jurisdiction has deemed caps essential.

Deposit Outflows Threaten Credit

According to Breeden, the Bank of England will present accounts to systemic stablecoin issuers, permitting them to carry reserves on the central financial institution and earn returns by investing a portion in short-term UK authorities debt.

The session will define a possible liquidity facility to assist solvent issuers monetize property throughout redemption stress.

Breeden emphasised that this place places the Bank within the position of “banker to systemic issuers,” thereby avoiding reliance on business banks for accounts.

The association mitigates monetary stability dangers related to the interconnectedness noticed throughout Circle’s USDC de-pegging in March 2023, following the failure of Silicon Valley Bank.

Earlier this month, Governor Andrew Bailey explained that fast deposit outflows into stablecoins might trigger “a precipitous drop in credit score for companies and households” if banks can’t shortly scale wholesale financing from insurers and funds.

Speaking with Cryptonews, Varun Paul, former Head of the Fintech Hub on the BoE, famous Bailey is “lifting the hood on the deep financial and coverage questions” surrounding stablecoins for the primary time, together with whether or not better separation between funds and credit score creation is sustainable.

Paul added that Bailey “opened the door to utilizing some regulatory options for non-bank stablecoin issuers—maybe a stablecoin can have FSCS safety if the issuer contributes to the scheme.“

The Bank plans to increase settlement property in its Digital Securities Sandbox to incorporate regulated stablecoins.

Fifteen companies, together with Euroclear, HSBC, J.P. Morgan, and the London Stock Exchange Group, are getting ready to launch buying and selling venues doubtlessly as early as subsequent yr.

Industry Pushback Intensifies

Just like Gordon, Simon Jennings, govt director of the UK Cryptoasset Business Council, additionally argued that “limits merely don’t work in apply” as a result of stablecoin issuers can’t monitor token holders in real-time.

Enforcing caps would require expensive techniques, resembling digital IDs or fixed pockets coordination.

The restrictions deepen tensions between the Bank and Treasury as Chancellor Rachel Reeves dedicated again in July to “drive ahead developments in blockchain expertise, together with tokenised securities and stablecoins.“

While the UK authorities is being criticized for its strategy to regulation, Reform UK chief Nigel Farage has lately pledged to slash crypto capital gains tax from 24% to 10% and set up a £5 billion Bitcoin reserve if elected, calling the Bank’s stablecoin caps “frankly ridiculous.” Reform at the moment leads in quite a few polling projections.

Nigel Farage proposes UK Bitcoin reserve with £5B in seized property and chopping crypto tax from 24% to 10% as Reform turns into first main celebration accepting crypto donations.#UK #Bitcoinhttps://t.co/w67fZLQTDR

— Cryptonews.com (@cryptonews) October 13, 2025

Breeden acknowledged coordination challenges, noting the UK authorities will appoint a Digital Markets Champion to coordinate personal sector work.

The authorities can be issuing a digital gilt instrument on a Sandbox platform to catalyze the adoption of DLT.

She famous that the Bank’s new wholesale funds infrastructure, RT2, already helps settlement utilizing tokenized central financial institution cash.

Synchronization performance will probably be launched subsequent yr within the Synchronization Lab for testing real-world use circumstances earlier than its manufacturing deployment.

Notably, this international adoption is rising because the worldwide stablecoin market has expanded to exceed $300 billion; but, sterling-pegged tokens stay beneath $580,000, in comparison with $473 million in euro-linked stablecoins, in accordance with DeFiLlama.

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