BoE plan to limit holdings in “systemic” stablecoins triggers warnings over competitiveness, enforcement and financial stability

LONDON — Cryptocurrency and payments groups are pressing the Bank of England to abandon plans to cap how many stablecoins people and companies can hold, arguing the policy would make Britain an outlier at a crucial moment for digital finance. The Bank has told industry it intends to proceed with proposals to limit individual holdings of so‑called “systemic” stablecoins to between £10,000 and £20,000, and corporate holdings to about £10 million. The caps would apply to tokens widely used for UK payments, or likely to be. The move, first reported by the Financial Times, has ignited a political‑economy debate that cuts across the City, Westminster and Threadneedle Street.

At the heart of the proposal is a familiar worry: if sterling‑referenced tokens become a mainstream payments rail, deposits could drain from commercial banks into privately issued digital money backed by safe assets like Treasuries. In stress, the Bank fears, that migration could amplify instability by forcing banks to replace funding quickly. Supporters of the caps say quantitative limits would give regulators time to observe how stablecoins behave in everyday use without allowing the banking‑system plumbing to be tested in extremis.

The industry pushback has been swift. “Imposing caps on stablecoins is bad for UK savers, bad for the City and bad for sterling,” said Tom Duff Gordon, vice‑president of international policy at Coinbase. He added that no other major jurisdiction has deemed it necessary to impose blanket holding limits. Trade bodies and payments firms say the policy, if enacted, would saddle wallets, exchanges and issuers with costly compliance mechanics to track cumulative balances across multiple providers and self‑hosted wallets—an exercise they argue is both technically fraught and privacy‑sensitive.

The Bank’s framing marks a shift from the dominant approach elsewhere. In the European Union, the new Markets in Crypto‑Assets (MiCA) regime focuses on licensing, governance and reserves. It restricts daily transaction use for certain non‑euro stablecoins—but it does not cap how much an individual may hold. In the United States, recent federal legislation has created a pathway for licensed issuers with strict backing and redemption requirements; again, there are no end‑user holding caps. By proposing quantitative limits on owners rather than issuers, the UK would chart a distinctly more cautious course.

What counts as “systemic” is central to how far the policy would reach. The Bank’s 2023 discussion paper set out a regime for systemic payment systems using stablecoins—those that could be widely adopted for day‑to‑day payments in the UK. Officials now say caps would apply to all such systemic tokens, not just one issuer. That choice aims to avoid the risk that activity simply migrates to the next‑largest coin. It also reflects a broader recalibration under which the central bank would permit stablecoin use for payments provided issuers meet high bars on backing, safeguarding and redemption.

Industry groups warn the practicalities are thorny. Wallet providers would need to aggregate a user’s balances across multiple platforms to ensure they do not exceed a £10,000–£20,000 ceiling, which could require new data‑sharing arrangements or digital identity schemes. Cross‑border use further complicates matters: a UK resident could maintain balances with offshore firms beyond the regulator’s reach. And if caps reset daily, weekly or monthly, firms would have to police rapid inflows and outflows to avoid accidental breaches—friction that, they say, will push payment innovators to other markets.

Payments companies also argue that limits blunt the very benefits policymakers say they want: faster, cheaper, always‑on settlement. Merchants with high‑volume flows could bump into a £10 million corporate cap during peak periods, while SMEs experimenting with stablecoin invoicing could find compliance overhead outweighs savings. Some warn of a two‑tier system in which large financial institutions continue to settle instantly using tokenised bank deposits or private bank money, while smaller firms face artificial ceilings on stablecoin balances.

Advocates of caps counter that Britain’s deposit‑funded banking model is a public good worth protecting. They note that stablecoin reserves—concentrated in short‑dated government paper—could grow large enough to alter money‑market dynamics, and that redemption runs can happen at crypto speed. Imposing per‑holder limits, they argue, is a proportionate way to manage a technology that is still maturing, especially until there is more evidence from live UK payment use.

Beneath the headline fight lies a question of regulatory philosophy. Should policymakers seek to replicate cash‑like guarantees in private tokens and then let demand decide scale? Or should they throttle adoption until unknowns—bank funding, monetary policy transmission, the perimeter of consumer protection—are better understood? Threadneedle Street’s caution contrasts with the government’s ambition to keep London competitive in digital finance. If the caps proceed, that divergence could become more visible, with firms choosing to pilot products under EU or US rules instead.

There are legal wrinkles, too. Caps would need a clear statutory basis, defensible metrics for who is in scope, and workable enforcement. Would thresholds apply at the level of an individual natural person, or at household and enterprise group level? How would providers treat non‑custodial wallets? Would balances in tokenised bank deposits or e‑money count toward the ceiling? The answers will determine whether the rules are merely annoying or actively debilitating for mainstream payments use.

Investors are watching for second‑order effects. If UK‑regulated issuers must monitor and limit holdings, they may prefer to gate access via a smaller set of KYC’d providers, reducing open‑network composability. International issuers could choose not to serve the UK at all. Either path would fragment liquidity and interoperability, leaving British consumers and merchants with fewer choices and higher costs. For a country that has long prided itself on rule‑of‑law predictability, that would be an odd kind of competitive offer.

Notably, the Bank has described the caps as potentially transitional—a bridge to broader adoption once data accumulates. Some in the industry say they could work with time‑limited guardrails, especially if paired with clear objectives and sunset clauses. But others worry that temporary measures have a habit of sticking, and that political pressure to “do something” in a crisis could hard‑wire limits into the regime.

For now, both sides are marshalling evidence. The Bank’s Financial Policy Committee has repeatedly flagged the risk that widespread stablecoin use could drain deposits and complicate lender‑of‑last‑resort operations. It also wants robust redemption rights and high‑quality liquid reserves. The crypto sector counters that well‑regulated, fully backed tokens can coexist with banks, and that the UK should embrace competition in payments infrastructure rather than pre‑emptively constraining it.

What happens next? Officials are expected to set out the technical design of the limits, including how providers should measure holdings and what happens at the threshold. Expect fierce debate over exemptions for merchants, market‑makers and payroll flows; how caps should treat stablecoins issued overseas; and whether there is a path to lift limits once specific safeguards—such as interoperable digital IDs or common wallet reporting—are in place. The outcome will signal whether the UK intends to lead on digital money by building for scale, or to permit only tightly fenced experiments.

For a country seeking post‑Brexit growth, the choice carries weight beyond crypto. Payments platforms drive commerce, and rules that shape who can hold what—and where—will influence where engineers, entrepreneurs and capital choose to build. Britain engineered the modern City by combining prudence with openness. The next iteration of money will test whether that formula still holds in a tokenised age.

Sources: Reporting based on: Financial Times (Sept. 15, 2025); Bank of England, ‘Regulatory regime for systemic payment systems using stablecoins’ (Discussion Paper, Nov. 2023); BoE Financial Policy Committee Record (July 2025); Finextra, Yahoo Finance, and CoinDesk coverage on Sept. 15, 2025.