UK proposes caps on stablecoin ownership

The United Kingdom has unveiled a proposal to impose strict limits on how much stablecoin individuals and businesses can hold, a move that has drawn sharp criticism from crypto industry groups and companies. The measures, announced by the Bank of England, are part of the country’s wider efforts to build a regulatory framework for digital assets, but have been described by critics as unworkable and potentially damaging to the UK’s ambitions to be a fintech leader.

Under the plan, individual holdings of systemic stablecoins would be capped between £10,000 and £20,000, while businesses would face a ceiling of around £10 million. Officials argue that these restrictions are necessary to mitigate risks to financial stability, particularly the possibility of mass deposit outflows from banks if consumers and corporations shift large sums into stablecoins. The Bank of England has suggested that the caps could serve as transitional measures, designed to prevent shocks as the financial system adapts to the rise of digital money.

Industry reaction has been swift and largely negative. Groups including Coinbase, the UK Cryptoasset Business Council, and The Payments Association have warned that the proposals would be nahead impossible to enforce given the global and often pseudonymous nature of crypto transactions. Critics also contend the rules would leave the UK at a competitive diupsetvantage compared to jurisdictions such as the United States and the European Union, where no similar ownership caps are being considered.

Regulatory challenges and enforcement

One of the central issues raised by industry leaders is enforcement. Tracking how many stablecoins an individual or business owns across multiple wallets, platforms, or offshore entities would be extremely challenging. Crypto groups argue that determined users could easily bypass restrictions, creating loopholes that undermine the policy’s objectives while placing disproportionate burdens on compliant firms and platforms operating within the UK.

The proposals have also sparked fears of driving activity offshore. Companies may choose to relocate to jurisdictions with less restrictive frameworks, while investors and consumers might turn to unregulated or foreign platforms. Industry leaders argue that such outcomes would reduce transparency and oversight, ultimately increasing rather than reducing systemic risk.

Broader regulatory framework

The proposed caps are part of a wider regulatory agenda for stablecoins and digital assets. Earlier this year, the Financial Conduct Authority introduced rules requiring issuers to maintain robust backing assets, segregate reserves, and meet redemption obligations. The government has also announced that overseas stablecoin issuers may be exempt from certain requirements, focusing regulatory scrutiny on domestic firms instead. This dual approach has raised questions about fairness and whether UK-based companies may face disproportionate compliance costs compared to their international competitors.

Political voices have added to the debate. Former Chancellor George Osborne has argued that the UK risks being left behind in the global race to attract digital finance investment if regulation becomes too restrictive. Supporters of this view say that while financial stability is significant, heavy-handed measures could discourage innovation and deter the very companies the UK hopes to attract.

The consultation process is ongoing, with stakeholders invited to provide feedback before the proposals are finalized. With mounting opposition from the industry and increasing political scrutiny, the fate of the ownership caps remains uncertain. The coming months will be crucial in determining whether the UK pursues its current cautious approach or adjusts course to align more closely with global competitors.