Bank of England May Scrap £20,000 Stablecoin Holding Cap

Event Overview: Bank of England Softens Stance

Recently, the Bank of England's (BoE) proposed rules regarding stablecoins have sparked controversy. The original plan set a holding cap for individual stablecoins between £10,000 and £20,000, while the holding cap for businesses was £10 million. In addition, systemic issuers would need to deposit at least 40% of their reserves as non-interest-bearing deposits at the central bank.

Breeden stated that while implementing these caps faces technical challenges, the regulations are designed to support an orderly transition of the financial system. She also mentioned that the Bank of England will re-examine whether its proposed 60:40 asset backing ratio is too conservative, although she believes this structure is broadly in line with the framework proposed in the United States and the practices already adopted in the European Union. Significance Analysis: UK Competitiveness Risk UK crypto industry groups have opposed this cap proposal, calling it "the wrong direction" and urging the Bank of England to abandon it. Breeden acknowledged that the pressure from the industry is "very real" but stated that the central bank has not received "the constructive suggestions I would have hoped for on how to address the problem."