Bank of England Backtracks on Stablecoin Holding Limits: What It Means for Crypto in 2025
- Why Is the Bank of England Changing Its Stablecoin Policy?
- How Does This Impact Crypto Exchanges Like BTCC?
- Stablecoin Wars: Why the Dollar Still Dominates
- What’s Next for UK Crypto Regulation?
- FAQ: Bank of England’s Stablecoin U-Turn
The Bank of England has reversed its stance on imposing strict limits for stablecoin holdings, sparking debates in the crypto industry. This move comes as global regulators grapple with the rise of dollar-pegged stablecoins, which dominate 99% of the market. The UK’s hesitation could push liquidity and talent to New York, warns industry leaders. Meanwhile, the BoE plans exemptions for crypto exchanges and explores stablecoin use in settlements. Here’s a deep dive into the implications.
Why Is the Bank of England Changing Its Stablecoin Policy?
The Bank of England (BoE) initially proposed capping stablecoin holdings at £10 million, a move met with fierce backlash from UK crypto firms. Critics argued this WOULD stifle innovation and drive businesses to more crypto-friendly jurisdictions like the U.S., where stablecoin regulations are already established. Sean Kiernan, CEO of Greengage, a UK-based digital finance platform, put it bluntly: "If the UK delays another year, liquidity, talent, and investment will flock to New York instead of London."
Facing pressure, BoE Governor Andrew Bailey signaled flexibility, suggesting exemptions for crypto exchanges struggling to operate under the proposed limits. This pivot highlights the growing "regulatory competition" among nations vying for crypto dominance. As of October 2025, GBP-pegged stablecoins account for just $580,000—a drop in the $300 billion stablecoin ocean.
How Does This Impact Crypto Exchanges Like BTCC?
The BoE’s backtrack is a win for exchanges requiring large stablecoin liquidity. For instance, BTCC, a leading crypto exchange, relies on stablecoins for seamless trading pairs and settlements. The proposed cap would’ve forced such platforms to fragment reserves across multiple wallets—a logistical nightmare. Now, with potential exemptions, exchanges can breathe easier.
Moreover, the BoE’smay soon permit stablecoins in settlement operations. This experimental framework could position London as a hub for blockchain-based finance, though it lags behind the U.S. and EU. Jannah Patchay of Markets Evolution notes: "Well-regulated GBP stablecoins could boost demand for UK debt—a smart MOVE for a government funding major infrastructure projects."
Stablecoin Wars: Why the Dollar Still Dominates
Dollar-pegged stablecoins like USDT and USDC command 99% of the market, raising concerns about "de facto dollarization." The EU’s euro-backed stablecoins trail at $500 million—barely 0.17% of the total. The BoE’s hesitation reflects a broader struggle: how to embrace crypto without ceding monetary sovereignty. As of 2025, no major economy has cracked this puzzle.
What’s Next for UK Crypto Regulation?
A public consultation on stablecoin rules is slated for late 2025. Key questions remain:
- Will exemptions apply to retail investors or only institutions?
- How will the DSS integrate with existing financial infrastructure?
- Can GBP stablecoins gain traction against their dollar rivals?
One thing’s clear: the UK can’t afford to dither. As Kiernan warns, "Regulatory certainty is oxygen for crypto businesses." Whether the BoE’s compromise delivers enough remains to be seen.
FAQ: Bank of England’s Stablecoin U-Turn
Why did the BoE reconsider stablecoin limits?
Industry pushback warned of capital flight to the U.S., where stablecoin rules are clearer. The BoE aims to balance oversight with competitiveness.
How do GBP stablecoins compare to dollar ones?
GBP stablecoins are negligible ($580k) versus $300 billion for dollar-pegged ones. The EU’s euro stablecoins are also larger ($500M).
What’s the DSS?
The BoE’stests blockchain-based asset trading and settlements, potentially including stablecoins.
