UK’s Central Bank Talks Tough on Stablecoins Yet Offers Sweetheart Exceptions for the Industry’s Biggest Players

Core Insights - The Bank of England (BoE) is considering exemptions for certain firms from proposed stablecoin limits due to industry pushback and increasing competition from the U.S. [1][2] Stablecoin Limits - The BoE plans to ease restrictions on stablecoin holdings for firms needing large reserves, such as crypto exchanges [2] - Previously proposed limits included £20,000 for individuals and £10 million for businesses [2][6] - Firms will be allowed to use stablecoins for settlements in the Digital Securities Sandbox [2] U.S. Competition - The U.S. has established a functional stablecoin framework with the GENIUS Act, providing issuers a clear path to launch and scale [3] - Critics argue that the U.K.'s limitations could hinder its firms' competitiveness [3] Digital Economy - The U.K. is shifting its approach to crypto following a tech deal with the U.S., indicating potential cooperation on digital assets [4][6] - BoE Governor Andrew Bailey acknowledges the potential of stablecoins to drive innovation in payment systems, while also noting the implications for commercial banks [4] Regulatory Changes - The U.K. retail investment market has recently gained access to crypto exchange-traded notes (cETNs) after a four-year ban [5][6] - The BoE's changing stance suggests a move away from an overly cautious approach to digital assets [7]