The Bank of England is facing criticism for its proposals to impose strict limits on the amount of stablecoins that individuals and businesses can hold. BofE officials are suggesting caps ranging from £10,000 to £20,000 for individuals and £10 million for businesses on systemic stablecoins. These measures aim to prevent a potential drain of deposits from traditional financial institutions as users turn to stablecoins for their convenience in real-time payments and yield-bearing interest rates.
Nick Jones, founder and CEO of Zumo, has spoken out against these proposals, stating, “This highlights the skepticism the Bank of England seems unable to shake when it comes to digital assets. No other major jurisdictions are seeking to restrict ownership in this way, which would hinder growth and diminish the UK’s competitiveness in a digital economy that’s already becoming heavily dollarized.”
The Bank’s stance contrasts sharply with the US market, where the Genius Act is promoting the use of crypto and stablecoins, and the EU’s Markets in Crypto-Assets Regulation (MiCA). Simon Jennings, executive director of the UK Cryptoasset Business Council, argues that enforcing limits on stablecoin holdings would be nearly impossible since issuers cannot track who holds their tokens at any moment. He adds that implementing such caps would necessitate complex and costly systems, such as digital IDs and constant coordination between wallets.
Later this year, the Bank of England plans to publish a consultation outlining its revised approach to regulating stablecoins, as well as addressing industry feedback regarding the allowance of returns on backing assets.