The UK looks to exempt certain firms from its proposed stablecoin caps. | Credit: Getty Images.
* The BoE previously proposed a £20,000 stablecoin limit for individuals, and £10 million for businesses.
* Crypto-linked ETPs are available for UK retail investors after a 4-year ban.
* The UK and the U.S. are expected to align on digital asset markets following a tech partnership deal.
After proposing limitations on the amount of stablecoins that businesses can hold, the Bank of England (BoE) wants to offer waivers to certain firms after industry pushback, and U.S. competition heats up.
Stablecoin Limits
As per Bloomberg, the BoE plans to ease restrictions on stablecoin holdings for firms that require large stablecoin reserves, such as crypto exchanges.
The U.K. central bank has previously tabled plans to limit stablecoin ownership to £20,000 for individuals and £10 million for businesses.
It also plans to allow firms to leverage stablecoins for settlements in its Digital Securities Sandbox.
This latest development may be the result of significant pushback from the crypto industry.
Having passed the GENIUS Act, the U.S. now has a functional stablecoin framework, giving issuers a clear and defined means to launch and scale.
Critics have warned that these limitations would make U.K. firms less competitive.
A consultation paper on the matter is expected to be published by the end of this year.
The Digital Economy
The U.K.’s crypto efforts have seen a notable change following its tech deal with the U.S., which is likely to see cooperation and alignment on digital assets.
The once-skeptical BoE governor, Andrew Bailey, recently stated that he sees great potential in stablecoins for “driving innovation in payment systems both at home and across borders.”
That said, he notes that stablecoin integration could reduce the role of commercial banks, which may have broad implications. However, it posits that banking and stablecoin systems could coexist if implemented properly.
Previously, Bailey had stated that stablecoins threaten to undermine trust in money and warned banks to watch payment innovations “carefully.”
On October 8, the UK’s retail investment market was granted access to crypto exchange-traded notes (cETNs), marking the end of a four-year ban on the products.
This, alongside shifting attitudes from its central bank and other major blockchain developments, has suggested that the UK’s overly cautious approach to digital assets is coming to an end.
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