The Bank of England has recently sent a strong signal: the cap on stablecoin holdings will not be lifted easily.
Deputy Governor Sarah Breeden was blunt—what would happen if stablecoins were allowed to expand without limits in the UK? Liquidity in commercial banks could dry up, lending to businesses and households could shrink, and the entire financial system could be shaken.
Looking at the real considerations behind the UK's restrictions
The UK's approach appears quite "conservative": individuals can hold a maximum of £10,000-£20,000 in stablecoins, companies up to £10 million, with possible exemptions for large corporations. But behind this framework, the central bank is really asking a fundamental question—when digital assets become the new "piggy bank," how will traditional banks survive?
The regulatory division of labor is also interesting: the Bank of England closely monitors GBP stablecoins (high systemic risk), while other stablecoins are given looser oversight by the Financial Conduct Authority (FCA). At the same time, the central bank is working with the Treasury to design a "stablecoin failure contingency plan"—in case a certain