The Bank of England is preparing to launch a regulatory framework for stablecoins, which could reshape how digital currencies operate in the UK’s financial system.
According to Bloomberg, the plan may include temporary limits on asset storage, setting a £20,000 cap for individuals and £10 million for businesses. Sources familiar with the draft indicate that certain exceptions will apply.
Deputy Governor Sarah Breeden said that the UK is advancing in step with the US in developing its stablecoin regime. She emphasized that the limits are temporary, intended to ensure market stability as the regulatory environment matures.
Why the UK Is More Cautious
Breeden highlighted that the credit structures of the US and UK differ sharply.
In the US, a significant portion of mortgages are financed through the securities market, whereas in the UK, they are largely funded by commercial banks.This structural difference, she noted, drives British regulators to take a more cautious stance as they balance innovation with financial security.
Bloomberg reported that the Bank of England expects to finalize its framework by late 2025.The new rules are also set to require asset reserves and greater issuer transparency, aligning with international best practices.
Stablecoin Regulation Around the World
Globally, stablecoin regulation has become a top priority for central banks and financial watchdogs:
United States
The US Treasury and Federal Reserve are exploring a regulatory model focused on bank-like supervision for major issuers such as Circle and Tether. Several bills in Congress — including the Clarity for Payment Stablecoins Act — propose strict reserve and audit requirements.
European Union
The EU’s Markets in Crypto-Assets (MiCA) framework, taking effect in 2024–2025, will be the world’s first comprehensive crypto regulation. MiCA mandates 1:1 reserve backing for stablecoins and limits their use if they threaten financial stability — a move seen as setting the global benchmark.
Asia
Japan legalized stablecoins in 2023 under new laws requiring issuers to be licensed banks or trust companies, ensuring full collateralization.Singapore’s Monetary Authority (MAS) is also rolling out a licensing framework for digital payment tokens, aiming for clarity without stifling innovation.
These global efforts, experts say, are driving a race toward regulated digital currencies, with the UK now positioning itself as a trusted global hub for crypto innovation under clear rules.
A Global Trend Toward Trust and Transparency
The Bank of England’s stablecoin initiative follows a broader global momentum.Previously, Governor Andrew Bailey, who also chairs the Financial Stability Board, urged the G20 to tighten oversight of stablecoins to safeguard global markets.
With frameworks emerging across the US, EU, and Asia, the UK’s 2025 goal signals its intention to stay competitive while prioritizing consumer protection and financial stability.
Source: https://coinpaper.com/12168/uk-to-limit-stablecoin-holdings-as-bank-of-england-prepares-2025-framework
