Cryptocurrency firms are actively lobbying the Bank of England to reconsider its proposed limits on stablecoin ownership. On September 15, 2023, the Financial Times reported that these restrictions would position the United Kingdom with stricter regulations on stablecoins compared to both the United States and the European Union. The central bank’s plan suggests capping individual ownership of stablecoins between £10,000 and £20,000 (approximately $13,600 to $27,200), while businesses would face a maximum limit of £10 million. These limits specifically apply to stablecoins deemed systemic, which are those expected to play a significant role in U.K. payments.
The proposed restrictions have drawn criticism from various stakeholders in the crypto and payment sectors. Industry leaders argue that these limits could disadvantage the U.K. within the global market and may prove difficult and costly to enforce. According to Tom Duff Gordon, vice president of international policy at Coinbase, “Imposing caps on stablecoins is bad for U.K. savers, bad for the city and bad for sterling.” He emphasized that no major jurisdiction has felt the need to impose similar caps.
The Bank of England has indicated that these ownership limits may be “transitional” as the financial system adapts to the evolving role of stablecoins. Nevertheless, experts within the industry are skeptical about the practical implications of such regulations. Simon Jennings, executive director of the UK Cryptoasset Business Council, highlighted that enforcing ownership caps would be challenging. He stated, “Stablecoin issuers don’t have sight of who holds their tokens at any given time, so enforcing caps would require a costly, complex new system, such as digital IDs or constant coordination between wallets.”
The discussion surrounding stablecoins also connects to broader trends in financial technology. Companies such as SoFi, Visa, PayPal, and Robinhood are increasingly focused on the significant role stablecoins play in facilitating cross-border payments. A report from PYMNTS on August 4, 2023, outlined the challenges within the current cross-border payment landscape, including lengthy settlement times, high fees, and a heavy reliance on intermediaries.
The report described the potential of stablecoins as a solution to these inefficiencies, offering advantages like instant transactions, lower costs, and enhanced accessibility. As the debate continues, the implications of the Bank of England’s proposed ownership caps will likely resonate throughout the financial sector, impacting both the stability of the currency and the growth of digital finance in the United Kingdom.