Bank of England to cap systemic stablecoins as stopgap

The Bank of England said Wednesday it will impose temporary limits on how much individuals and businesses can hold and transact in systemic stablecoins to guard against sudden bank deposit outflows that could shrink credit to households and firms. Deputy Governor Sarah Breeden said the measures are intended as a stopgap while the financial system adjusts and will be removed once stablecoin adoption no longer threatens the provision of finance to the real economy.

Breeden described limits under consideration that would cap individual holdings in a band of roughly 10,000 to 20,000 pounds, with higher thresholds for businesses, and possible transaction-size caps. She said exemptions are likely for certain large firms such as supermarkets and for participants in the United Kingdom's digital sandbox, a testing environment for distributed ledger technology. The Bank plans a public consultation on the detailed regime to begin in November, with final rules expected to be settled in 2026.

The central bank's primary concern is that rapid shifts of customer deposits into stablecoins could force banks to shrink lending if they cannot replace funding quickly through wholesale markets....