UK’s Capped Stablecoins Could Lead to Caged Innovation

Group 1 - The Bank of England proposes to limit the amount of stablecoin tokens individuals can hold to between £10,000 and £20,000, and businesses to £10 million [1] - The main concern driving this proposal is the potential for stablecoins to cause bank deposit outflows, which could negatively impact banks' lending capabilities [1][2] - If approved, the regulation may hinder innovation and block mainstream crypto adoption, significantly impacting the industry in the UK, which ranks 11th in the 2025 Global Crypto Adoption Index [2] Group 2 - Critics argue that imposing caps on stablecoins could be detrimental to UK savers and the financial sector, with no other major jurisdiction having implemented similar restrictions [3] - The enforcement of caps may lead to reduced privacy and require a complex system for monitoring, such as digital IDs [3] - The global stablecoin market is substantial, with a total market cap of $302 billion, indicating that limitations in the UK could affect a wide range of users and financial innovations [4]