London In a major step toward regulating digital assets in the United Kingdom, the Bank of England (BoE) has proposed a framework that would cap holdings of so-called “systemic stablecoins” at £20,000 for individuals and £10 million for businesses.
This proposal forms part of the BoE’s broader consultation on the regulation of sterling-denominated digital tokens that are widely used for payments or settlement sometimes referred to as “systemic stablecoins”. According to the bank, the rules are necessary to manage risks arising from rapid outflows of bank deposits into crypto assets, which could undermine financial stability.
What the Proposed Limits Involve
Under the draft framework:
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Individual users would be limited to holding up to £20,000 in each designated systemic stablecoin.
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Most corporate holdings would be capped at £10 million, though the BoE has indicated that certain entities with operational needs (such as large payment platforms or retailers) may qualify for exemptions.
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The limits are described as temporary transition tools, meant to apply while the UK payment and banking system adapts to digital-asset flows. The BoE emphasises it will lift limits only when confident the crypto infrastructure poses no threat to financial stability.
Why This Matters
The proposed caps highlight several key regulatory themes:
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Deposit flight risk: The BoE’s modelling reveals that large flows from bank deposits into stablecoins could reduce banks’ ability to lend, posing systemic risk. The limit is a tool to slow that migration.
Innovation vs regulation tension: Firms in the UK crypto ecosystem warn that such limits may stifle growth and drive innovation offshore potentially undermining the UK’s ambition to lead in digital finance. -
Global positioning: The UK’s proposed regime is among the stricter global approaches, with limits tighter than those currently being discussed in the U.S. or EU raising questions about competitiveness and regulatory arbitrage.
Key Considerations & Next Steps
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Consultation period: The BoE has opened a public consultation on the regime, seeking feedback ahead of final rule-making in 2026.
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Enforcement complexity: Tracking individual holdings across wallets, exchange accounts and multi-token holdings may prove operationally difficult. Industry stakeholders have flagged enforcement burden as a concern.
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Exemption pathways: The BoE acknowledges that certain businesses might require holdings in excess of the £10 m cap for legitimate operational purposes exemption criteria will be detailed in later guidance.
FAQs
Q1: What is the limit being proposed for individual stablecoin holdings?
The proposed cap is £20,000 per person for holdings in any sterling-denominated stablecoin classified as systemically important.
Q2: What about the cap for businesses?
Most businesses would be limited to £10 million in such stablecoin holdings, though exemptions are foreseen for large operating firms with legitimate payment/settlement use.
Q3: Why is the BoE proposing these caps?
The bank is acting to limit the risk of large-scale bank deposit migration into stablecoins, which could reduce banks’ lending capacity and threaten financial stability.
Q4: Are these limits permanent?
No the limits are described as temporary transitional measures, to be removed when the system is judged safe enough to allow unlimited holdings.
Q5: How will this affect users in the UK crypto market?
Retail users may face constraints on how much they can hold in designated stablecoins, while businesses may need to plan for compliance and possible alternative structures if their holdings exceed the cap.
