The Bank of England has faced criticism over its proposal for strict limits on stablecoin usage, potentially making UK regulations stricter than those in the US and EU.
Proposed Stablecoin Limits
The Bank of England (BoE) has proposed capping individual ownership of systemic stablecoins that are used or likely to be used for payments in the UK, at £10,000 to £20,000 ($12,500 to $25,000) for individuals and £10 million ($12.5 million) for businesses. The BoE argues these limits are necessary to protect the banking system from deposit drainage and financial stability risks.
Industry Opinions and Executive Perspectives
The BoE's proposal has sparked discontent among the cryptocurrency sector. Tom Duff Gordon, Vice President of International Policy at Coinbase, stated, 'Imposing caps on stablecoins is bad for UK savers, bad for the City, and bad for sterling.' Additionally, Simon Jennings, Executive Director of the UK Cryptoasset Business Council, noted the high costs and complexity associated with implementing such limits, requiring systems like digital IDs.
Implications for the UK's Financial Market
The ongoing discussion around these new regulations has escalated tensions between the BoE and the Treasury, particularly after BoE Governor Andrew Bailey intervened to delay a fintech banking license for Revolut. Professor Gilles Chemla from Imperial College warned that the UK risks falling behind in stablecoin regulation, stating that 'London has the talent and markets to lead the digital economy, but delays in regulatory frameworks are eroding that edge.'
The proposed measures by the Bank of England could have a significant impact on the financial landscape in the UK, with industry feedback underscoring the importance of the ongoing dialogue regarding the future of stablecoins.
