The Bank of England has unveiled plans for transitional holding limits on stablecoins in the UK, proposing caps of £10,000 to £20,000 for individuals and £10 million for businesses for systemic stablecoins widely used in payments. These limits, announced in October 2025, are not finalized and await industry feedback through a consultation paper expected by year-end.
Sasha Mills, Executive Director at the Bank of England, emphasized the transitional nature, stating, "Consistent with our position in the November 2023 Discussion Paper, we are also considering introducing holding limits for systemic stablecoins. These limits would be transitional and allow the financial system to adjust to new forms of digital money." The proposal aims to regulate digital money forms while giving the financial system time to adapt.
Industry reactions have been critical, with leaders like Simon Jennings and Tom Duff Gordon warning that the caps could stifle innovation, reduce liquidity, and harm the UK's crypto competitiveness. They highlight enforcement challenges and note that no other major economy, such as the US or EU, has imposed similar quantitative limits, making the UK a regulatory outlier.
In a softening stance, the Bank of England is now considering exemptions for certain firms, including crypto exchanges that require large stablecoin holdings for liquidity and settlement. Additionally, regulated stablecoins will be permitted as settlement assets in the Digital Securities Sandbox, a pilot environment for testing blockchain-based issuance and trading. This shift follows industry pressure and global competition, with the US's GENIUS Act already setting rules for dollar-backed stablecoins.
Governor Andrew Bailey, once skeptical of stablecoins, has recently acknowledged their potential to drive innovation and coexist with traditional finance. Data from DefiLlama reveals a stark imbalance: global stablecoin circulation exceeds $300 billion, but sterling-pegged tokens are negligible at $581,000, compared to $468 million for euro-linked stablecoins, underscoring concerns that the UK risks falling behind in the digital asset race.