Call for Rethink on Stablecoin Regulations
A coalition of British parliamentarians has called on the Bank of England (BoE) to rethink proposed regulations that could impose significant limitations on stablecoin holdings for individuals and businesses. The plans, which are currently under discussion, would set a maximum ownership limit of £20,000 ($26,350) for individual users and £10 million ($12.7 million) for businesses, with the possibility of exceptions for larger enterprises.
Proposed Framework and Concerns
Furthermore, the proposed framework stipulates that issuers of stablecoins would be restricted to holding no more than 60% of their reserve assets in short-term UK government bonds; the remaining 40% would have to be kept in non-interest-bearing accounts at the Bank of England.
These policy measures are intended to ensure that the financial system maintains access to credit as it evolves alongside the rise of digital currencies. The central bank has indicated that these regulations could be subject to alterations or may even be repealed in the future.
Stakeholder Reactions
In a letter to Rachel Reeves, the UK’s Chancellor of the Exchequer, stakeholders expressed their alarm over what they perceive to be a move towards a restrictive regulatory environment that could stifle innovation and drive crypto-related activities abroad. Among the letter’s signatories were CMC Markets CEO Peter Cruddas and members from the House of Lords, including Emma Pidding, David Goddard, and Kulveer Singh Ranger. Notably, former defense secretary Gavin Williamson was also among those who signed the correspondence.
In comments made to Bloomberg, Kulveer Singh Ranger emphasized that the proposed limits on stablecoin holdings could disadvantage the UK, especially since no other major jurisdiction is implementing similar measures.
The recommendations from the Bank of England specifically target what it defines as “systemic stablecoins,” which are privately issued, sterling-pegged digital tokens aimed for routine transactions. However, established stablecoins like Tether (USDT) are not affected by these guidelines, as they fall under the jurisdiction of the Financial Conduct Authority (FCA).
Industry Perspectives
CryptoUK, a trade association representing several cryptocurrency exchanges, including OKX and Gemini, conveyed its support for reasonable regulatory oversight of stablecoins but expressed concerns that ownership caps might undermine the UK’s aspirations to lead in digital finance. The group urged regulators to favor a balanced approach that would nurture innovation and attract investment within the digital finance sector.
Comparative Regulatory Landscape
Additionally, a policy paper from the Bank of England released last November warned that a swift transition to digital currency could jeopardize the liquidity of the UK’s banking system in scenarios of high adoption. In contrast, the GENIUS Act, which President Trump signed into law in July in the U.S., does not impose similar restrictions on personal stablecoin holdings but does place limits on the reserves maintained by stablecoin issuers.
