Heavy-Handed Rules Could Harm Savers and Competitiveness, Critics Say

The Bank of England’s proposal to impose strict caps on stablecoin ownership has sparked strong resistance from the crypto industry. Industry groups warn that the limits—intended to safeguard the financial system—risk undermining innovation, discouraging adoption, and leaving the UK behind global peers.

Under the draft plan, individuals would be restricted to holding between £10,000 and £20,000 ($13,600–$27,200) in so-called systemic stablecoins, while businesses would face a ceiling of £10 million ($13.6 million). These tokens, typically pegged to fiat currencies, are increasingly used for payments and digital transactions.

The initiative comes as the Bank of England, working alongside the Financial Conduct Authority, designs a broader regulatory framework for digital money.

Bank of England Defends Caution as Systemic Safeguard

Officials argue that curbs on stablecoin holdings are necessary to prevent deposits from shifting out of traditional banks and into digital tokens, potentially weakening the financial system. The Bank of England has suggested the caps could be a “transitional” measure until markets adjust.

But critics say the policy goes too far. “Bad for UK savers, bad for the City and bad for sterling,” is how Tom Duff Gordon, vice-president of international policy at Coinbase, described the proposal. He stressed that no other major jurisdiction has introduced ownership caps.

Enforcement Challenges Raise Further Doubts

Industry representatives also question whether the rules are workable. Simon Jennings, executive director of the UK Cryptoasset Business Council, noted that stablecoin issuers cannot track who holds tokens at any given time. Enforcing limits, he argued, would require costly and intrusive systems such as digital IDs or real-time wallet monitoring.

Such measures, critics warn, could not only deter users but also increase friction in a market prized for efficiency and accessibility.

Clash With Treasury’s Pro-Innovation Agenda

The proposal has also highlighted a growing rift between the Bank of England and the Treasury. Chancellor Rachel Reeves has signalled her intention to make Britain a leader in blockchain innovation, backing developments in tokenized securities and stablecoins.

That stance contrasts with the Bank’s cautious approach—and with developments abroad. In the US, lawmakers recently passed the GENIUS Act, giving stablecoins firmer footing in the financial system. Meanwhile, the European Union’s MiCA framework regulates stablecoins without imposing ownership caps.

A Fast-Growing Market at Stake

Globally, the stablecoin market is booming. Valued at around $288 billion, it is projected to soar past $1.2 trillion by 2028, according to Coinbase estimates. Most of this growth has been driven by dollar-based tokens.

UK industry leaders fear that restrictive caps could push companies and innovation overseas. Proponents of stablecoins argue the opposite: that they lower costs for cross-border payments and open doors to new financial products, making them a crucial part of the digital economy’s future.

What Comes Next

The Bank of England is expected to launch a public consultation later this year, laying out its updated regulatory approach. But with mounting pressure from crypto executives, trade groups, and policymakers, calls are growing for the central bank to rethink its stance.

Industry voices warn that if the UK does not adopt more flexible rules, it risks losing its place in the global race to regulate and embrace digital assets—a contest in which both the US and EU are already advancing.