Bank of England Softens Stablecoin Cap Plan After Pushback

Core Viewpoint - The Bank of England is advancing plans to limit stablecoin holdings while allowing exemptions for certain crypto firms in response to industry feedback [2][3][5] Group 1: Regulatory Framework - The Bank of England aims to strengthen oversight of digital money and maintain financial stability by introducing limits on stablecoin holdings [2][3] - Individuals may hold stablecoins valued between $13,400 and $26,800 (£10,000–£20,000), while businesses could hold up to $13.5 million (£10 million) [2] - The revised framework will differentiate between stablecoins used for consumer payments and those used by institutions for settlement or liquidity management [4] Group 2: Exemptions and Industry Impact - Following industry objections, the BoE plans to include exemptions for crypto exchanges, custodians, and fintech firms that require larger stablecoin reserves for operational liquidity [3][5] - The exemptions aim to support market makers, exchanges, and blockchain projects within the UK's Digital Securities Sandbox, which serves as a regulatory testbed [5][6] - The sandbox is overseen by both the BoE and the Financial Conduct Authority (FCA) and is part of the UK's initiative to modernize capital markets using distributed ledger technology [6] Group 3: Future Implementation - The final proposal from the BoE will be subject to public consultation later this year, with phased implementation expected in 2026 [4] - The approach acknowledges the essential role of stablecoins in the tokenization of real-world assets, balancing risk control with innovation [6][7]