What happened? The Bank of England will impose temporary caps on stablecoin holdings but has not said when they will be lifted.
The BoE announced temporary limits on how much people and businesses can hold in systemic stablecoins to protect credit availability. Proposed caps are about £10,000–£20,000 for individuals and £10 million for businesses, and the bank said it will give accounts and reserve services to systemic issuers. A detailed consultation is due later this year, but it gives no clear timeline or metrics for when these limits would end.
Who does this affect? Everyday savers, businesses using stablecoins, crypto firms, and UK financial markets are all touched by the move.
Retail holders of stablecoins could be directly limited in how much they can hold, while businesses that use stablecoins for payments or treasury purposes could hit the proposed business cap. Stablecoin issuers, exchanges, and custodians will face new account and liquidity rules and may have to build costly systems to enforce or monitor caps. Banks, fintechs, and government agencies will also feel the effect through changes to deposit flows, potential easing of bank credit pressures, and political and industry pushback.
Why does this matter? The caps could change liquidity, investor behavior, and the UK’s competitiveness in digital finance.
Capping holdings may reduce outflows from banks to stablecoins and help protect credit supply, but it could also push crypto activity to other jurisdictions without such limits. Greater regulatory uncertainty and compliance costs could lower trading volumes, fragment liquidity, and slow adoption of tokenised securities and other crypto-linked products in the UK. For markets, that means potential volatility, less domestic demand for sterling-pegged tokens, and a longer-term risk that the UK loses business to places with clearer, more permissive rules.