Core Viewpoint - The Bank of England has proposed a regulatory framework for sterling-denominated stablecoins, introducing temporary holding limits to mitigate risks to financial stability in the UK [1][2]. Regulatory Framework - The proposed regime targets systemic stablecoins that are widely used in payments and could impact UK financial stability, with joint oversight from the Bank of England and the Financial Conduct Authority [4]. - Issuers are now allowed to hold up to 60% of backing assets in short-term UK government debt securities, while maintaining at least 40% in unremunerated Bank of England deposits [5]. - Capital requirements are aligned with international standards, requiring reserves equal to either the cost of recovery from the largest plausible loss event or six months of operating expenses [5]. Temporary Limits - The Bank has introduced temporary limits of £20,000 for individuals and £10 million for businesses holding systemic stablecoins to prevent rapid deposit outflows from commercial banks [1]. - Deputy Governor Sarah Breeden stated that these caps would be lifted once the transition no longer poses a risk to the UK economy [1]. Industry Response - Industry executives have criticized the holding limits as overly cautious compared to the US approach under the GENIUS Act, which does not impose ownership caps [3]. - The proposed caps have faced backlash from crypto advocates, who argue that the measures are counterproductive and may force users to move funds into riskier assets [7].