BOE’s £20,000 Stablecoin Cap Draws Industry Backlash

- The Bank of England’s new framework proposes caps on stablecoin holdings for individuals and businesses. - Cryptocurrency stakeholders criticize the measures as overly restrictive and innovation-limiting. On November 10, 2025, the Bank of England (BOE) unveiled a proposed regulatory framework for stablecoins aimed at mitigating financial stability risks. However, while the proposal improves upon earlier drafts, the cryptocurrency industry has raised concerns that the rules could hinder innovation and stifle growth in the UK’s digital finance sector. The BOE identified systemic retail stablecoins as a key focus of its framework, which includes controversial holding limits of £20,000 for individuals and £10 million for businesses. According to the BOE, these caps are designed to prevent significant outflows from traditional bank deposits into stablecoins—a shift that could reduce credit availability. Still, industry figures have branded these limits as “unworkable” and “disruptive,” fearing the measures could impede regular financial activities and discourage businesses from adopting stablecoin technology. Backing requirements for stablecoin issuers have also fueled debate. The BOE proposes that issuers hold up to 60% of stablecoin reserves in UK government debt and deposit the remaining 40% at the central bank, where it will not earn interest. This dual-asset structure marks a progression from stricter earlier drafts, which required issuers to hold 100% of reserves as central bank deposits. Despite this improvement, concerns persist about the profitability of stablecoin firms under these terms, as industry stakeholders argue the unremunerated deposit portion could undermine operational feasibility. Enforcing the proposed framework presents further challenges. Critics question how the BOE plans to monitor compliance with holding caps, pointing to the decentralized nature of stablecoins and their widespread use through secondary markets and peer-to-peer transactions as significant hurdles. Although the framework drew significant criticism, the industry welcomed certain parts. The BOE proposes granting stablecoin issuers access to central bank liquidity lines and permission to use reserves for liquidity purposes, steps viewed as innovative. Nonetheless, the broader industry feels the framework is too restrictive, and many believe this, combined with slow regulatory progress, could drive crypto firms to relocate to regions with more favorable policies. The BOE has signaled openness to feedback and plans to finalize its framework in 2026. Industry stakeholders warn that striking the right balance between financial stability and innovation is crucial to solidify the UK’s position as a global leader in digital finance. As of November 14, 2025, PayPal USD (PYUSD) was trading at $1.00, with a 24-hour trading volume change of 0.02%. Meanwhile, Tether USDt (USDT) stood at $0.999, with its volume changing by -0.089%, and USDC was trading at $1.00, showing a 24-hour volume change of -0.036%.