Bank of England proposes strict stablecoin caps

TLDR

The Bank of England wants to cap how much systemic stablecoin people and companies can hold and how issuers hold reserves, and this is already drawing strong industry pushback.

1. Draft rules would cap individual systemic stablecoin holdings at about 20,000 and business holdings at about 10 million, plus require a large slice of reserves at the central bank.
2. Officials frame this as managing bank run and systemic risk, while industry voices like Coinbases CEO warn it could make the UK an innovation blocker in digital finance.
3. The plan is still at consultation stage, with FCA sandbox trials and an industry petition that could force a parliamentary debate likely to influence the final design.

Deep Dive

1. What The BoE Is Proposing

According to reporting on the draft framework, the Bank of England is considering caps on holdings of systemic pound-backed stablecoins at roughly 20,000 (about $26,000) per individual and 10 million (about $12.7 million) per business, with larger firms able to request higher limits if they prove operational need and strong risk controls.The same draft would require around 40% of reserves to sit in non-interest-bearing accounts at the central bank.

CCN notes that these measures are aimed at preventing large, rapid outflows from banks into stablecoins and reducing the risk that a loss of confidence in a big stablecoin could trigger broader financial instability.Foreign stablecoins such as USDC or USDT could continue in the UK but would likely be treated as non-systemic with a different regime.

2. Why Industry Is Worried

Coinbase CEO Brian Armstrong has publicly argued that these stablecoin caps would turn the UK into an innovation blocker, saying they risk undermining Londons position as a global financial hub just as stablecoins become core market plumbing.He points to the proposed 20,000 and 10 million caps plus the 40% non-interest reserve requirement as structural brakes on growth.

A related concern is competitiveness. The global stablecoin market is around the hundreds of billions of dollars, and other jurisdictions such as the United States under its new GENIUS Act are moving toward frameworks that could allow much larger scale and even yield-bearing stablecoin products.A TRM Labs based report highlights that stablecoins are already core payment rails, even as illicit use rises, which is pushing regulators to act rather than ignore the sector.

3. What Happens Next And Who Is Affected

The caps are not yet law. They sit within a broader UK package where the Financial Conduct Authority is running a dedicated stablecoin sandbox with firms like Revolut and others to test real world issuance and payments before final rules land later in 2026.The FCA has said sandbox findings will help shape the permanent regime that goes live from 2027.

On the political side, a Stand With Crypto UK petition backed by Coinbase has passed 80,000 signatures and could trigger a parliamentary debate if it reaches 100,000, giving the industry a channel to argue for looser caps or more flexible thresholds.Armstrong is actively urging UK users to support a pro innovation stablecoin regime through this petition.

Conclusion

The Bank of Englands proposed stablecoin caps reflect a clear tradeoff between systemic risk control and open ended growth of pound stablecoins as general purpose money. For crypto users and issuers, the UK looks set to allow regulated stablecoins but with hard constraints on scale and economics, which could keep London safe but also push some high volume activity and innovation toward more permissive jurisdictions unless the final rules soften.