Bank of England to lift stablecoin limits only once risks to financial stability subside
The Bank of England (BoE) will maintain its proposed limits on stablecoin holdings until it is certain that the digital assets pose no risk to the broader financial system, Deputy Governor Sarah Breeden said on Wednesday.
In a speech, Breeden emphasized that the central bank’s cautious approach stems from concerns that large and sudden outflows of bank deposits into stablecoins could destabilize traditional lending. “Such outflows could lead to a precipitous drop in credit for businesses and households,” she warned, if banks are unable to replace lost deposits quickly through wholesale funding.
The BoE has previously suggested caps of between £10,000 and £20,000 ($12,800–$25,600) for individuals, with higher thresholds for businesses. The final levels will be detailed in a consultation paper next month, which will outline the UK’s future stablecoin regulatory framework.
Breeden said the caps would be lifted “once we see that the transition no longer threatens the provision of finance to the real economy.” Large corporations, however, may be exempt so they can hold higher amounts if necessary.
Under the UK’s proposed framework, the BoE would oversee systemic sterling-backed stablecoins — those expected to play a major role in payments — while the Financial Conduct Authority (FCA) would regulate smaller issuers. The BoE is also working with the Treasury on a resolution regime to ensure continuity of services if a stablecoin issuer fails.
Breeden rejected criticism that the UK is lagging in crypto regulation, noting that Britain aims to finalise its framework next year, aligning its timeline with the United States.
