UK Crypto Groups Criticize BoE’s Proposed Stablecoin Caps
UK crypto industry bodies have urged the Bank of England to scrap its proposed stablecoin caps, warning limits of £10,000–£20,000 per retail user and £10 million per business will undermine sterling and stifle innovation. Officials argue the caps will bolster financial stability by monitoring bank disintermediation and preventing rapid retail deposit outflows. Industry representatives counter that enforcing ownership limits is impractical and costly, requiring digital ID systems and wallet coordination that issuers cannot deploy at scale. Critics also say the UK risks falling behind the US and EU in competitive cross-border payments if it adopts stricter stablecoin regulation. The BoE and FCA plan a Q4 consultation, describing any caps as transitional while the market adapts.
Bearish
The proposed stablecoin caps are likely to constrain demand for stablecoins in the UK, reducing on-chain liquidity and limiting growth in cross-border payment corridors. Enforcement challenges and high compliance costs increase market uncertainty. In the short term, traders may sell or avoid UK-linked stablecoin products. Over the long term, stricter regulation risks driving issuers and investors to more permissive jurisdictions, dampening the UK’s crypto market and weakening sterling demand.