Understanding the £10k–£20k Personal Threshold and the £10 Million Corporate Ceiling
The Bank of England confirmed on Tuesday that individuals will be restricted to holding between £10,000 and £20,000 in systemic payment-stablecoins, while businesses will face a £10 million cap. Deputy Governor Sarah Breeden defended the decision as a “temporary” safeguard against sudden deposit flight from commercial banks, yet the consultation paper due later this year offers neither a timetable nor measurable criteria for lifting the limits. By withholding a sunset clause, the central bank has effectively asked the market to take on trust that caps will be removed once credit conditions are judged secure—an open-ended commitment that has already drawn fire from crypto exchanges, fintech lobbyists and traditional finance alike.
The policy is a stark departure from the United States, where July’s GENIUS Act introduced a comprehensive federal regime without ownership caps. Coinbase’s vice president of international policy called the British approach “bad for savers, bad for the City and bad for sterling,” arguing that no other major jurisdiction views quantitative limits as necessary for consumer or systemic protection.
Credit Preservation Versus Digital Innovation
Governor Andrew Bailey has warned that a rapid switch from bank deposits into sterling-denominated stablecoins could create a “precipitous drop in credit for businesses and households” if lenders cannot tap wholesale funding quickly enough. To mitigate that risk, the Bank intends to offer reserve accounts and a liquidity backstop to systemic issuers, effectively positioning itself as “banker to the issuer” and reducing links to fragile commercial-bank rails. Supporters say the framework remedies vulnerabilities exposed when USDC briefly lost its dollar peg in March 2023. Critics counter that the same liquidity tools should make hard caps unnecessary, contending that well-capitalised stablecoin providers will already be required to hold high-quality liquid assets, predominantly short-dated gilts.
Are Liquidity Facilities Enough?
The forthcoming consultation is expected to describe an emergency lending window, akin to the discount facility banks enjoy, enabling issuers to monetise reserve portfolios during heavy redemptions. Yet industry groups insist that monitoring wallet balances in real time would demand costly digital-ID frameworks and constant inter-issuer coordination—controls that clash with the borderless design of public blockchains. Absent clear metrics for decommissioning the caps, they argue, the liquidity promise rings hollow and could nudge serious issuers toward less restrictive hubs in the European Union, the Gulf or North America.
Political and Industry Fallout Ahead of a High-Stakes Election Year
The tension between prudence and competitiveness is spilling into Westminster. While the Treasury has publicly committed to advancing tokenised securities and regulated stablecoins, opposition parties sense an opening: Reform UK leader Nigel Farage has pledged to slash crypto capital-gains tax and carve out a £5 billion Bitcoin reserve, branding the Bank’s caps “frankly ridiculous.” Polling momentum has amplified his remarks, forcing both the Treasury and the Bank to justify a stance that places the United Kingdom at odds with peer regulators.
Market data reinforce the strategic stakes. Global stablecoin supply now exceeds US $300 billion, yet sterling-pegged tokens account for less than US $0.6 million, compared with roughly US $473 million in euro-linked coins. Supporters of the cap argue this tiny footprint gives policymakers room to calibrate protections before mass adoption. Detractors maintain that the very absence of a domestic market is proof that over-caution is already stifling innovation—and that firms poised to join the Bank’s Digital Securities Sandbox next year could migrate if clarity remains elusive.
For now, the Bank’s message is clear: credit stability comes first. Whether that stance cements the City’s reputation for soundness or sidelines it in the next wave of digital money will hinge on one unanswered question—how long “temporary” turns out to be.
