Coinbase urges UK to lift sterling stablecoin holding caps to protect market competitiveness
Coinbase VP of International Policy Tom Duff Gordon told the UK House of Lords Financial Services Regulation Committee that proposed Bank of England caps on sterling stablecoin holdings risk hobbling innovation and London’s financial role. The BoE plan cited during the hearing would limit personal stablecoin holdings to £20,000 and corporate holdings to £10 million — thresholds Duff Gordon said are too restrictive for stablecoins to serve as meaningful settlement infrastructure, including tokenized gilts and bond transactions. He made five recommendations: remove holding limits, increase reserves held in short-term UK government debt, enable wholesale settlement, harmonize rules globally, and permit platforms to offer rewards to stablecoin holders. Duff Gordon argued sterling stablecoins could lower international payment costs, speed domestic settlements and boost the pound’s role versus dollar-pegged tokens. He acknowledged stability risks but noted stablecoins differ from banks because they are fully reserved and do not undertake maturity transformation; the Bank of England’s proposed liquidity facility could mitigate run risk by allowing asset exchange for cash in stress. Coinbase UK CEO Keith Grose emphasized clear authorisation, practical rules and banking access are needed to keep crypto activity in the UK. The testimony frames regulatory design as decisive for the UK’s competitiveness in digital payments and capital markets.
Neutral
The news is neutral for crypto markets overall. It represents regulatory risk but also potential long-term demand: Coinbase’s push to remove holding caps and enable wholesale settlement signals industry desire for broader use of sterling stablecoins, which could increase utility and adoption if accepted. Short-term impact is limited because the proposals are consultative and subject to policymaking timelines; markets generally react more to finalized rules or enforcement actions. The testimony may raise volatility for sterling-pegged stablecoins and UK crypto stocks around policy announcements, but it does not immediately change on-chain fundamentals. Historically, regulatory calls for clearer, pro-innovation rules (e.g., Singapore, Switzerland adjustments) have been bullish for local crypto activity over months to years; conversely, restrictive rules (e.g., some US state-level limits) have driven firms to relocate and temporarily weighed on local listings and volumes. Therefore traders should monitor: 1) formal UK regulatory decisions and timelines; 2) any BoE consultation outcomes on holding caps or liquidity facilities; and 3) announcements from stablecoin issuers about reserve composition and settlement capabilities. Short-term traders: expect possible headlines-driven volatility in sterling stablecoin markets and UK-listed crypto firms. Long-term investors: a favorable regulatory outcome would be mildly bullish for sterling stablecoins and London’s crypto infrastructure, while maintained caps would be bearish for onshore stablecoin adoption and could favor dollar-pegged alternatives.