The Bank of England (BoE) is moving closer to introducing a comprehensive stablecoin regulatory framework, marking one of the most significant steps yet toward bringing digital assets into the mainstream financial system. According to Bloomberg, the BoE is considering temporary holding limits for both individuals and businesses, reflecting growing caution about the potential impact of stablecoins on the wider economy, particularly the mortgage and banking sectors.
Under the proposed plan, individuals could face a temporary cap of £20,000, while businesses might be limited to £10 million in stablecoin holdings. These restrictions would serve as transitional safeguards, allowing regulators to monitor how the emerging market for stablecoins interacts with the traditional financial system before allowing broader adoption.
Sarah Breeden, Deputy Governor of the Bank of England, emphasized that the UK is keeping pace with U.S. regulators in crafting stablecoin policies and that the proposed limits are not intended as permanent restrictions. “We’re moving at the same speed as the United States, ensuring we’re not falling behind,” she said, noting that the temporary limits are a cautious but necessary step as regulators balance innovation with financial stability.
Breeden also highlighted a key structural difference between the UK and U.S. credit systems. In the United States, much of the mortgage financing occurs through securitized markets, while in the UK, it is largely funded by commercial banks. This fundamental distinction makes British regulators more cautious about introducing new digital forms of money that could disrupt liquidity or create imbalances in traditional lending markets.
Bloomberg reports that the Bank of England aims to finalize its stablecoin framework by the end of 2025, with rules expected to include strict reserve requirements, enhanced transparency, and clear operational standards for stablecoin issuers. These measures would align the UK with global regulatory efforts led by jurisdictions such as the U.S., the European Union, and Japan, which are all working to integrate digital currencies into regulated financial ecosystems.
The move underscores the UK’s ambition to become a global hub for digital finance, ensuring that innovation in blockchain and decentralized payment systems can thrive within a robust legal and supervisory framework. However, the Bank of England remains wary of systemic risks, particularly regarding liquidity management, consumer protection, and the potential spillover effects into retail banking.
In conclusion, the introduction of stablecoin limits marks a pivotal moment for the UK’s digital asset policy. While the restrictions may appear conservative, they demonstrate a deliberate approach aimed at safeguarding financial stability while enabling innovation. As the BoE finalizes its framework, the balance between regulation and innovation will shape the future of digital currency adoption in one of the world’s most influential financial centers.
