Cryptocurrency firms are lobbying the Bank of England to ease proposed limits on stablecoin ownership, which would impose stricter regulations than those in the United States or the European Union. Reports from the Financial Times on September 15 indicate the central bank is considering ownership caps ranging from £10,000 to £20,000 (approximately $13,600 to $27,200) for individuals, while businesses could face a maximum of £10 million. The caps would specifically target systemic stablecoins, which are widely utilized or expected to be utilized for payments within the UK.
The proposed restrictions have drawn criticism from various stakeholders in the crypto and payments industries. Opponents argue that such limitations could disadvantage the UK in the global market and create challenges for enforcement. Tom Duff Gordon, Vice President of International Policy at Coinbase, articulated concerns, stating, “Imposing caps on stablecoins is bad for UK savers, bad for the city and bad for sterling. No other major jurisdiction has deemed it necessary to impose caps.”
Concerns Over Implementation and Impact
The Bank of England has suggested that these ownership limits could serve as a transitional measure, allowing the financial system to adjust to the increasing prevalence of stablecoins. Nevertheless, industry leaders warn that enforcement may be impractical. Simon Jennings, Executive Director of the UK Cryptoasset Business Council, emphasized that stablecoin issuers lack visibility into who holds their tokens at any given time. He noted, “Limits simply don’t work in practice,” adding that enforcing such caps may necessitate a complex and costly system, potentially involving digital IDs or ongoing coordination between digital wallets.
Furthermore, firms like SoFi, Visa, PayPal, and Robinhood are increasingly recognizing the role stablecoins can play in enhancing cross-border payments. According to PYMNTS, the inefficiencies of the current cross-border payment system—characterized by lengthy settlement times, elevated fees, and a reliance on intermediaries—highlight the potential benefits of stablecoins. These digital assets can facilitate instant transactions, lower costs, and programmable transfers, making them an attractive alternative.
The Future of Stablecoins in the UK
As the debate continues, the implications of stablecoin ownership limits will likely shape the future landscape for the UK’s cryptocurrency sector. The proposed restrictions have raised significant questions about the UK’s competitive position in the evolving global digital finance market. Stakeholders are calling for a more balanced approach, advocating for regulations that protect consumers while fostering innovation in the burgeoning world of digital currencies.
With the ongoing discussions around stablecoin regulations, it remains crucial for the Bank of England to consider the input from industry representatives. The outcome of this debate could have lasting effects not only on the cryptocurrency landscape but also on the broader financial ecosystem in the UK.
