BOE To Soften Stablecoin Cap Plans Amid Industry Pushback

The Bank of England (BOE) is reconsidering its proposed limits on corporate stablecoin holdings in response to industry backlash. Initially, the BOE planned to impose caps of £20,000 for individuals and £10 million for companies, citing concerns over systemic risks associated with stablecoins like USDt and USDC. However, the BOE may introduce exemptions for firms needing to maintain larger reserves, reflecting an awareness of the competitive landscape, particularly as the U.S. moves towards clearer regulations. Critics argue that the proposed limits are impractical for businesses that rely on stablecoins for trading and liquidity management. Recent comments from BOE officials indicate a recognition of stablecoins as valuable innovations within the financial system, prompting a potential shift towards a more flexible regulatory approach. The stablecoin market, currently valued at about $314 billion, predominantly features tokens pegged to the U.S. dollar, while pound-pegged stablecoins remain negligible. Some experts predict that all fiat currencies will eventually exist in stablecoin form.

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