UK Stablecoin Cap Could “Make Businesses Unworkable,” Experts Say

The Bank of England’s proposed cap on stablecoin holdings – £20,000 per individual and £10 million per business – is facing significant opposition from the crypto industry, founders, CEOs, and politicians. Critics argue the restrictions could cripple payments, hinder business growth, and encourage companies and talent to relocate. The Bank of England aims to prevent deposit flight by limiting the amount of funds that can quickly move from traditional bank accounts into stablecoins, which could disrupt lending. Concerns also exist regarding the requirement for issuers to hold 40% of reserves in unremunerated Bank of England accounts, potentially reducing revenue.

Industry leaders, including Coinbase CEO Brian Armstrong and Aave founder Stani Kulechov, have voiced concerns that the caps would stifle innovation and make the UK less competitive. Some founders have already begun relocating businesses to more favorable jurisdictions like the Isle of Man. The enforceability of the caps on self-custodial wallets is also questioned. Furthermore, data suggests stablecoins complement, rather than replace, traditional bank deposits, challenging the Bank of England’s core justification.

Facing mounting pressure, the Bank of England has signaled openness to alternative risk management approaches. Updated draft rules are expected in June, with final regulations planned by year-end. However, industry stakeholders emphasize the need for swift and competitive policymaking to prevent the UK from falling behind the EU and the US in the rapidly evolving crypto landscape.

(Source：BeInCrypto)