Bank of England Clarifies Stablecoins Limits Are Only Temporary

The Bank of England (BoE) has sought to reassure the crypto industry that its proposed restrictions on stablecoins holdings and transaction sizes will be temporary, emphasizing that the measures are designed to ensure financial stability during the early stages of adoption rather than to stifle innovation.

Speaking at DC Fintech Week on Wednesday, Deputy Governor Sarah Breeden explained that the central bank ultimately intends to support the use of stablecoins as part of a “multi-money system.” The temporary limits, she said, will simply give the financial system time to adapt safely to new digital forms of money.

A Temporary Measure for Stability

The BoE first floated the idea of stablecoin limits in a November 2023 discussion paper, suggesting caps between £10,000 and £20,000 ($13,429 to $26,858) to prevent potential shocks to credit markets. These proposals faced strong criticism from industry groups in September, who argued that such measures would harm innovation and deter crypto businesses from operating in the UK.

Breeden addressed these concerns directly, stating that the limits would be lifted once the financial system demonstrates it can handle stablecoin integration without destabilizing traditional credit markets. “We would expect to remove the limits once we see that the transition no longer threatens the provision of finance to the real economy,” she further added.

She explained that the temporary caps are intended to allow the “structure of real-economy financing to adjust” and to help the BoE “monitor adoption of stablecoins and assess potential rapid changes in the structure of the financial system.”

Consultation and Next Steps

The BoE will launch a formal consultation before the end of the year to gather feedback from industry stakeholders on the exact limit levels and how the new regime will be implemented. Breeden also noted that one proposal under consideration includes higher limits for businesses and possible exemptions for supermarkets and large corporations.

A further carveout for firms operating in the UK’s digital sandbox, which launched in October 2024 to test blockchain-based financial technologies, is also being discussed.

Breeden said the BoE’s main concern is avoiding a sudden shift of deposits from banks into stablecoins, which could trigger a sharp drop in credit availability. She emphasized that gradual adjustment is essential in the UK, where businesses and households depend heavily on bank lending.

At the wholesale level, Breeden maintained that central banks should remain the primary venue for settlement of asset markets, though she acknowledged a growing role for tokenized deposits and regulated stablecoins in future financial infrastructure.

She concluded by calling for cooperation between regulators and innovators.