Bank of England Holds Steady on Stablecoin Limits
The Bank of England is not budging on its proposed stablecoin holding limits. It wants to ensure that a massive shift of bank deposits into digital assets won’t harm the real economy,as reported by Reuters.
Deputy Governor sarah Breeden highlighted the risks.Unrestricted stablecoin use could drain liquidity from banks, leading to a credit crunch for consumers and businesses. The bank will maintain these limits until it’s confident in financial stability.
The plan sets strict thresholds for individuals and companies. Individuals might face caps between £10,000 and £20,000. Corporations could see limits up to £10 million.
However, major firms might be exempted for operational needs. the BoE will oversee systemic sterling-backed stablecoins, while the Financial Conduct Authority handles the rest.
Alongside this, the BoE and UK Treasury are crafting a resolution regime for stablecoin failures. This aims to protect market continuity if a major stablecoin collapses.
These measures come as the UK competes wiht the U.S., where the GENIUS Act offers clearer guidelines for dollar-backed stablecoins. The BoE’s cautious approach seeks to balance innovation with financial stability.
