Summary
- Bank of England’s stablecoin cap sparks pushback from crypto leaders
- UK stablecoin limits draw criticism over enforceability and market impact
- Crypto industry warns “no other major jurisdiction has deemed it necessary to impose caps”
UK regulators propose caps on stablecoin ownership to protect financial stability. The crypto industry criticizes the plan as costly, unnecessary, and counterproductive, to say the least.
The Bank of England‘s plan to impose strict limits on stablecoin ownership reportedly drew immediate criticism from crypto and payments industry groups, who said the proposed caps — £10,000–20,000 per individual and £10 million per business for all systemic stablecoins — would be extremely difficult to enforce, requiring costly new systems such as digital IDs or constant wallet monitoring, the Financial Times has learned.
The restriction initially aimed to mitigate financial stability risks tied to large and rapid outflows of deposits from the banking sector, such as sudden drops in the provision of credit to businesses and households. But critics warned that the measures could put the UK at a competitive disadvantage compared with other countries, where regulators have taken a more flexible approach to stablecoin use.
Tom Duff Gordon, vice-president of international policy at Coinbase, told the FT that imposing caps on stablecoins is “bad for UK savers, bad for the City and bad for sterling,” adding that “no other major jurisdiction has deemed it necessary to impose caps.”
The global stablecoin market has grown rapidly and is nearing $289 billion this year, mainly dominated by U.S. dollar-based tokens. Now, with new regulations in the U.S., including the Genius Act, stablecoins are seem to be expected a central component of the financial system, with Coinbase forecasting the market could reach $1.2 trillion by 2028.
Crypto leaders respond
Several crypto leaders also voiced strong objections to the Bank of England’s proposals on X. For instance, Stani Kulechov, the founder and CEO of Aave, a decentralized peer-to-peer lending platform, criticized the idea of capping stablecoin holdings in an X post as both unnecessary and counterproductive, emphasizing that regulation of on-chain stablecoins should not treat them as inherently riskier than traditional electronic money.
“This is absurd, and we need to push back against this kind of regulation. Stablecoins issued onchain do not pose greater risks than traditional electronic money issued on more fragile electronic databases.”
Stani Kulechov
Henry Duckworth, CEO of AgriDex, echoed concerns that the cap was misguided, framing it as a threat not only to the UK crypto sector but to the country’s broader standing in the global digital economy.
“Anyone patriotic about what the UK can be, and could be, should resist this and should sign this petition. This isn’t just about the UK crypto industry. It’s about whether Britain still welcomes the technologies that will decide who plays a part on the world stage.”
Henry Duckworth
Alexis Roussel, chief operating officer of NYM, framed the proposal in a more pointed way, saying in an X post that “at least if it was weed, it would make sense.”
As of press time, Tether is the largest stablecoin issuer on the market with more than $170.6 billion in market capitalization, followed by Circle with $72.7 billion and Ethena with $13.7 billion, per data from DefiLlama.
The backlash adds to tensions between the BoE and the Treasury, following interventions by BoE governor Andrew Bailey in regulatory matters, including halting a meeting by chancellor Rachel Reeves aimed at speeding up Revolut’s banking license, the FT has learned, adding that Reeves committed to supporting digital innovation in UK financial services and said in a July speech she would drive forward developments in blockchain technology, including tokenized securities and stablecoins.