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The Bank of England stablecoin proposal has ignited a fierce debate after the central bank suggested capping individual holdings of the digital pound. In a November 2023 discussion paper, the bank floated limits ranging from £10,000 to £20,000 (about $13,500 to $27,000), while also requesting feedback on a lower cap of £5,000.
According to a Financial Times report published Sept. 15, industry advocates argue the restrictions would be expensive to enforce and risk placing the UK behind rival markets such as the United States and the European Union.
Tom Duff Gordon, Vice President of International Policy at Coinbase, said the move could undercut confidence in the pound.
“No other major jurisdiction has deemed it necessary to impose caps,” — Gordon told the FT. “This would be bad for UK savers and the pound itself.”
Criticism of the Bank of England stablecoin plan has been particularly strong among advocacy groups. Simon Jennings, Executive Director of the UK Cryptoasset Business Council (UKCBC), questioned whether such restrictions could even be enforced.
“Limits simply don’t work in practice,” — Jennings told the Financial Times. “Issuers don’t have sight of who holds their tokens at any given time, so enforcing caps would require a costly, complex new system.”
In comments to Cointelegraph earlier this month, Jennings highlighted the UKCBC’s ambition to build a transatlantic stablecoin payment corridor with the United States. He warned that the Bank of England’s restrictions would undermine such an initiative by constraining liquidity and efficiency.
The Bank of England stablecoin debate reflects a wider regulatory unease about the role of private digital currencies in financial markets. In April 2025, the Financial Policy Committee cautioned that rapid stablecoin adoption could destabilize economies, particularly where foreign-denominated tokens displace national currencies.
Similar concerns have been voiced elsewhere. Christine Lagarde, President of the European Central Bank, urged policymakers to close regulatory gaps, warning that looser U.S. policies could tilt global payment flows.
“This could potentially result not just in further losses of fees and data, but also in euro deposits being moved to the United States,” — Lagarde said.
Banks also fear heightened competition. Citi’s Global Head of Future of Finance, Ronit Ghose, warned in August that yield-bearing stablecoins could prompt capital flight similar to the U.S. money market fund surge of the 1980s.
For many in the industry, the solution lies not in restrictions but in adaptation. Matt Hougan, Chief Investment Officer at Bitwise Asset Management, argued: “If local banks are worried about competition from stablecoins, they should pay more interest on deposits.”
George Osborne, former UK Chancellor and now an advocate for digital finance, echoed these concerns earlier this year, warning that the UK is at risk of falling behind in the global stablecoin race if policymakers adopt overly rigid frameworks.
For crypto investors, the Bank of England stablecoin policy debate underscores both opportunity and uncertainty. A strict cap could limit utility, dampening adoption and liquidity. However, regulatory clarity may also encourage greater institutional participation in the UK market.
The central bank’s next steps will be decisive. If the Bank of England integrates industry feedback, it may still establish a flexible framework that balances stability with innovation. For now, the UK’s approach to stablecoins remains a pivotal test of whether regulation can keep pace with technological change.
Long-term, the outcome of the Bank of England stablecoin consultation could determine whether the UK emerges as a global hub for regulated digital assets or falls behind more progressive jurisdictions. Investors are closely monitoring how far the government is willing to go in aligning its policies with those of the U.S. and the EU, both of which are developing competing frameworks.
At the same time, the debate signals a growing recognition that stablecoins are no longer a niche product but a core part of the financial system’s future. For investors, the trajectory of UK regulation will not just shape local opportunities but could also influence broader market confidence in stablecoins as a legitimate and investable asset class.
