BoE Proposes £20,000 Cap on Retail Stablecoin Holdings
The Bank of England’s Financial Policy Committee (FPC) has proposed a £20,000 retail stablecoin cap to limit systemic risk from private digital currencies and prevent competition with bank deposits. Under the proposed cap, individuals could hold no more than £20,000 in fiat-backed tokens—such as USDT and USDC—at any time. The FPC will launch a public consultation ahead of finalising the rules later this year. The measure aligns the UK’s timeline with US stablecoin regulations and echoes global efforts like the EU’s MiCA framework. Industry participants warn that the stablecoin cap may dampen retail demand and hinder innovation in the short term but could enhance financial stability and boost sector confidence over the long run.
Bearish
The proposed stablecoin cap is bearish for the stablecoin market in the short term, as it will directly limit retail holdings and dampen demand for tokens like USDT and USDC. Reduced buying pressure may lead to lower trading volumes and weigh on liquidity. In the long term, clearer regulation and enhanced financial stability could bolster confidence, but the immediate impact is likely to constrain growth and trading activity in the retail segment.