Cryptocurrency groups are calling on the Bank of England to abandon plans to limit how many stablecoins people can own, which would give the UK much stricter rules for the fast-growing market than the US or EU.
The Bank of England’s proposal to impose strict limits on how much stablecoin individuals and companies can own has reportedly triggered a backlash from the crypto industry, which says the measure risks stifling growth and putting Britain behind its peers, according to Financial Times.
Officials have suggested ownership caps of between £10,000 and £20,000 ($13,600 to $27,200) for individuals and £10m ($13.6m) for businesses on systemic stablecoins, those widely used for payments or likely to become so.
The plan comes as the central bank, working with the Financial Conduct Authority, develops a regulatory framework for digital tokens pegged to fiat currencies.
Industry groups argue the approach is unnecessarily heavy-handed.
“Imposing caps on stablecoins is bad for UK savers, bad for the City and bad for sterling,” said Tom Duff Gordon, vice-president of international policy at Coinbase, the US crypto asset exchange. “No other major jurisdiction has deemed it necessary to impose caps.”
Other crypto industry executives said the BoE’s limits would be hard to implement and hamper the potential benefits of stablecoins — such as making cross-border payments cheaper and faster.
“Limits simply don’t work in practice,” said Simon Jennings, executive director of the UK Cryptoasset Business Council trade body. “Stablecoin issuers don’t have sight of who holds their tokens at any given time, so enforcing caps would require a costly, complex new system, such as digital IDs or constant co-ordination between wallets,” he said.
The central bank’s caution reflects concerns that widespread use of stablecoins could drain deposits from traditional banks and weaken the financial system. Officials insist the limits could be transitional while the market adjusts to the rise of digital money.
Simon Taylor, Board Member and founder of Global Digital Finance comments: „I see a world where tokenized deposits are the mainstream product, and stablecoins are a form of programmable e-money, that can bridge borders and 3rd party networks uniquely well.
Tokenized deposits will be closed loop. Stablecoins are open loop. This combination is the future of payments. And it’s what every serious bank, payments company and merchant is trying to figure out.
As a resident and someone who cares deeply about the UK – I hope we see a stablecoin regieme in the UK ASAP, and that its competitive on the global stage.”
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Related document: Britain must get serious about stablecoins – or risk falling behind
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