According to reports, the BoE is weighing guardrails on the total amount of stablecoins
issued, rather than relying mainly on strict holding limits for individuals and businesses. That
would mark a shift from earlier proposals, which included potential caps of £10,000 to
£20,000 for individuals and around £10 million for businesses.
The original thinking was understandable. The Bank remains concerned that widespread
stablecoin adoption could pull deposits away from commercial banks, reducing their
capacity to lend and creating new risks in periods of market stress. For a central bank
responsible for financial stability, that concern is not going away.
But holding limits are difficult to square with real-world institutional use. Corporates, banks,
asset managers and payment providers need meaningful balances to support treasury
operations, cross-border settlement, liquidity management and tokenised asset
transactions. A hard cap on business holdings risks making stablecoins look less like serious
financial infrastructure and more like a useful tool regulators are still slightly afraid to let out
of the box.
Issuer-level guardrails may offer a more workable model. Rather than trying to police every
wallet or corporate account, regulators could focus on the scale, reserve quality,
redemption arrangements and systemic footprint of stablecoin issuers. That approach is
much closer to how institutional finance already thinks about risk.
For the corporate sector, this matters. Stablecoins are increasingly being viewed not simply
as crypto instruments, but as potential settlement tools for cross-border payments,
tokenised funds, collateral, trade finance and digital capital markets. If the UK wants to
remain competitive in digital financial infrastructure, its rules need to support serious
institutional use while still protecting the banking system.
The BoE is not opening the gates without conditions. Financial stability, reserve backing and
redemption risk will remain central to the final framework. But the direction of travel is
important.
The debate is moving beyond whether stablecoins should exist. It is now about how they
can be safely integrated into regulated finance.
