| What to Know: – BoE proposes transitional sterling stablecoin holding caps to protect credit supply. – Indicative caps: £10k–£20k per person, ~£10m per business, reviewable. – Industry warns caps disadvantage savers, hard to enforce across platforms without digital identity. |
According to the bank of England, its consultation on systemic sterling stablecoins proposes transitional holding limits to mitigate bank disintermediation and protect credit supply. Indicative calibrations discussed include per‑coin caps of £10,000–£20,000 for individuals and around £10 million for businesses, subject to review.
As reported by The Peg, Deputy Governor Sarah Breeden told lawmakers the holding limits are intended as temporary, to allow the financial system to adjust as usage scales. She also underscored that the caps would be revisited as evidence accumulates.
As reported by CoinDesk, industry groups including Coinbase and the Payments Association argue the caps could disadvantage savers and be difficult to police across platforms. The UK Cryptoasset Business Council warned enforcement may be near‑impossible without new digital identity infrastructure, and stakeholders fear competitiveness risks relative to EU MiCA and emerging US approaches.
As reported by Global Government Fintech, officials have shifted from an initial idea of 100% backing in unremunerated central bank deposits to permitting up to 60% of reserves in short‑term UK government gilts, with the remainder in central bank deposits. The change reflects concern that an all‑deposit model would not sustain viable issuer business models while maintaining strong liquidity.
Allowing high‑quality, short‑duration gilts could generate modest yield to fund operations, while central bank deposits help anchor redemption at par and intraday liquidity. Implementation details remain under consultation, and any reserve mix would likely be calibrated to issuer scale and risk.
Political scrutiny has focused on signaling and international positioning. “They send the wrong signal to investors and innovators looking to build in Britain,” said Lord Ed Vaizey, Co‑Chair of the All‑Party Parliamentary Group on Crypto & Digital Assets.
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