Bank of England Deputy Governor Sarah Breeden addressed concerns over proposed stablecoin limits, stating that they are intended as temporary tools to safeguard financial stability – not permanent restrictions.
She affirmed that the central bank ultimately supports a role for stablecoins within a multi-money system, but needs time to monitor adoption and prevent sudden disruption to credit flows.
Why the BoE Introduced Limits
The planned caps, first floated in a 2023 discussion paper, would limit how much stablecoin individuals could hold and how many transactions they could make. The aim is to avoid rapid deposit outflows from banks into stablecoin assets – a shift that could threaten traditional credit channels.
Breeden explained that these interim limits would give the financial system space to adapt gradually, enabling regulators to observe stablecoin growth and its impact on the structure of finance.
While industry groups have criticized the caps – warning they could stifle innovation and deter crypto business from the UK – the BoE insists the policy will be lifted once stablecoin adoption no longer poses systemic risks.
The Bank plans a consultation by year-end on the exact limits, thresholds, and carveouts (such as higher allowances for businesses or exemptions for certain wallet types) to balance enterprise flexibility with oversight.
Implications, Risks & Outlook
This temporary approach signals a cautious but not dismissive stance toward stablecoins. The BoE’s insistence on removing the limits later indicates regulatory intent to integrate rather than suppress stablecoin usage.
For crypto firms, the policy creates uncertainty: swift enforcement may hamper growth or discourage fresh investment. But it also gives a clearer path forward, especially for stablecoins targeting UK operations.
From a risk standpoint, the limits reflect concerns over the velocity of money flows. If stablecoins attract large, sudden inflows, banks may struggle to maintain credit availability for households and businesses.
Going forward, key watchpoints include how the BoE handles feedback from industry consultation, the pace at which limits are relaxed, and whether exemptions or tiered thresholds emerge. The balance between innovation and stability will shape the UK’s reputation as a crypto-friendly jurisdiction.
As previously covered, stablecoin regulation is evolving globally – this UK approach suggests a middle course: temporary guardrails rather than outright bans.
