Bank of England Proposes £20,000 Cap on Stablecoin Holdings to Mitigate Systemic Risks

The Bank of England (BOE) unveiled a consultation paper on November 10, 2025, outlining a proposed regulatory framework for systemic stablecoins, which are digital assets expected to be widely used for payments. Under the plan, the BOE would impose temporary holding caps of £20,000 for individuals and £10 million for businesses, aimed at preventing large-scale outflows from traditional banks into stablecoins.

Deputy Governor Sarah Breeden emphasized that these limits reflect the UK’s reliance on a bank-dependent mortgage market and would be lifted once regulators determine that risks to financial stability have subsided. The proposal also requires systemic stablecoins to hold 40% of their reserves in unremunerated deposits at the BOE, with the remaining 60% in short-term UK government bonds, ensuring liquidity and exposure to safe assets.

However, the plan has drawn pushback from the crypto industry, with critics arguing it could stifle innovation, weaken UK competitiveness, and prove difficult to enforce for non-exempt traders. Some large crypto exchanges and institutional investors are expected to receive exemptions. The Financial Conduct Authority (FCA) will oversee non-systemic stablecoins under the broader digital asset regime, while the BOE focuses on those vital to the UK’s payments infrastructure.

This move aligns with the UK government’s commitment to keep pace with U.S. regulation, as both jurisdictions race to define clear frameworks for stablecoin adoption in mainstream finance. The consultation period is ongoing, with implementation likely taking several months after feedback and parliamentary processes.