Bank of England holds Steady on Stablecoin Limits
The Bank of England is not budging on its proposed stablecoin holding limits. It wants to ensure that a massive shift of bank deposits into digital assets won’t harm the real economy,as reported by Reuters.
Deputy Governor Sarah Breeden highlighted the risks.She warned that unrestricted stablecoin use could drain liquidity from banks. This could lead to a sudden drop in credit for households and businesses.
The UK’s approach to stablecoins is cautious. The plan sets strict limits on how much stablecoin individuals and businesses can hold. For individuals,the limit could be between £10,000 and £20,000. Corporations might face a cap of up to £10 million. Though, major firms may get exemptions for operational needs.
the Bank of England will only oversee systemic sterling-denominated stablecoins. These are the ones widely used for payments or pose a threat to financial stability. The Financial Conduct authority will supervise the rest.
Alongside the cap discussion, the boe and UK Treasury are working on a resolution regime. This is to handle potential stablecoin failures and protect market continuity.
Just a week ago, a Bloomberg report suggested the central bank might introduce exemptions for certain firms. This move is seen as a response to industry pressure. The UK faces competition from the U.S., where the GENIUS Act has paved a clearer path for dollar-backed stablecoins.
