The Bank of England (BOE) seems to be easing its position on proposed restrictions for corporate stablecoin holdings, planning to introduce exceptions for certain firms that might need to maintain larger reserves of fiat-backed assets, as reported by Bloomberg on Tuesday.
According to sources familiar with the discussions, Bloomberg informed that the BOE’s change of heart comes amidst significant industry backlash and rising international competition, particularly from the United States, which is progressing towards clearer regulations through the GENIUS Act, signed into law in July.
The BOE had initially proposed limits on stablecoin holdings — £20,000 (approximately $27,000) for individuals and £10 million for companies — due to concerns about systemic risks associated with widely utilized tokens like USDt (USDT) and USDC (USDC).
The measures were designed to help the central bank control the money supply, safeguard consumers, and prevent over-reliance on privately issued digital currencies.
While these limits might suit traditional businesses, crypto-native firms may contend that such caps would hinder their operations, as they require significant stablecoin reserves for trading and liquidity management. Bloomberg reported that the BOE might consider offering exemptions for these companies.
As Cointelegraph noted, Simon Jennings of the UK Cryptoasset Business Council stated that the proposed stablecoin limits “simply don’t work in practice.”
BOE Governor Andrew Bailey had previously cautioned that privately issued stablecoins could jeopardize financial stability and diminish governments’ capacity to conduct monetary policy. However, in comments made last week, Bailey adopted a more accommodating stance, recognizing that stablecoins could be a beneficial innovation that might coexist within the greater financial system.
The BOE’s shifting stance underscores the UK’s ongoing endeavor to balance financial stability with competitiveness in the rapidly growing stablecoin market. Critics note the UK has been slow to respond compared to counterparts like the US and the European Union.
Related: Bank of England governor says stablecoins could reduce reliance on banks
UK lags in stablecoin race
The global stablecoin market has surged to a valuation of around $314 billion, predominantly with tokens pegged to the US dollar.
In comparison, pound-pegged stablecoins account for a minuscule part of the market — less than $1 million in total circulation, according to DefiLlama data referenced by Bloomberg.
Despite the UK’s cautious approach and concerns about market risks, Tether co-founder Reeve Collins remarked that it’s only a matter of time before all fiat currencies are available in stablecoin form, potentially as early as 2030.
“All currency will be a stablecoin. So even fiat currency will be a stablecoin. It’ll just be called dollars, euros, or yen,” Collins stated at the Token2049 conference in Singapore.
Collins believes stablecoins are on track for widespread adoption due to their user-friendliness and their role in facilitating the growth of tokenized assets, an area increasingly drawing traditional financial investment.
Related: Coinbase turns lobbying efforts to UK in scathing op-ed
