Here’s a summary of what’s going on — what the Bank of England (BoE) is proposing regarding stablecoins, what crypto / payments / business groups are objecting to, and why. If you want, I can also give my view on whether their concerns are valid.
What the BoE is proposing
The BoE plans to impose ownership caps for “systemic stablecoins” (defined as stablecoins that are or become widely used for UK payments). For individuals: £10,000-£20,000; for businesses: £10 million.
The rationale is concerns about financial stability risks, especially the risk that large holdings of stablecoins could lead to sudden outflows of deposits from banks, reducing credit available to households/businesses.
The BoE suggests the limits could be transitional — i.e. in place while the financial system adapts.
What critics are saying (crypto / payment industry / trade bodies)
These are the main objections from crypto groups etc.:
Stifling innovation / placing the UK at a disadvantage
They argue that such ownership caps — especially when other jurisdictions (US, EU, etc.) are not imposing similarly strict limits — will make the UK less attractive for stablecoin / crypto innovation.
Difficult or costly to enforce
Stablecoin issuers often do not have full visibility of who ultimately holds coins/tokens (wallets can be pseudonymous, holdings distributed across addresses). Imposing ownership caps could require heavy compliance burdens: digital IDs, tracking wallets, coordination, etc. The cost / complexity may be very large.
Questions about fairness
Some argue it’s unfair to treat stablecoins differently from other forms of money or money-like things (bank accounts, cash, e-money). If you can hold large balances in bank accounts, why limit stablecoins?
Harm to users, savers and financial services sector
Caps might limit how people use stablecoins — for example for cross-border payments, faster & cheaper transactions, etc. They may reduce consumer choice, harm “savers” who want to use stablecoins, or hamper what fintechs / payments providers can offer.
Risk of the UK falling behind globally
Because regulation is being rolled out slowly, and this kind of restrictive measure could make UK less competitive vs US / EU / other jurisdictions that are more permissive or have different models.
Why the BoE is doing it / what they worry about
To understand the tension, here are what the BoE sees as the risk:
Stablecoins, especially “systemic” ones, if large and widely held, could pull funds out of the banking sector (people shifting deposits into stablecoins), possibly reducing the banks’ ability to lend.
Sudden or large outflows (e.g. during a crisis) could destabilize the system.
Systemic stablecoins might become payment infrastructures or systems whose failure or interruption would have broader effects (so want to guard against that).
Key trade-offs / Issues
Here are the trade-offs and practical issues at stake, which underlie the disagreement:
Regulatory clarity vs. flexibility: Industry wants clear, proportionate rules; BoE wants to avoid risks but might impose heavy rules that reduce flexibility.
Innovation vs. safety: Too tight a regulation risks stifling new services / fintechs, but too loose may expose consumers or the financial system to risks.
Enforcement: Tracking ownership of tokens (which can be transferred, held in many wallets) is harder than tracking bank deposits. There’s privacy concerns, technical complexity.
Global coordination: If UK imposes strict caps but other countries do not, stablecoin business flows (investment, development, usage) may happen elsewhere, meaning UK loses out.