Bank of England Plans to Exempt Some Businesses From Stablecoin Limits
The Bank of England reportedly plans to grant exemptions to its proposed limits on stablecoin holdings to allow cryptocurrency exchanges and certain other businesses to hold larger amounts of the tokens.
The stablecoin caps are expected to be announced by the end of the year, Bloomberg reported Tuesday (Oct. 7).
The BOE will also let firms use stablecoins as a settlement asset in its Digital Securities Sandbox, allowing the central bank to see stablecoins in use as it considers how it will approach the technology, according to the report.
It was reported Sept. 15 that cryptocurrency companies were lobbying the BOE to rethink its stablecoin ownership limits, arguing that the restrictions put the United Kingdom at a disadvantage by giving it more stringent rules for the stablecoin sector than the United States or the European Union.
At the time, the BOE was set to propose limits on individual stablecoin ownership of 10,000 pounds to 20,000 pounds (about $13,600 to $27,200), with businesses being restricted to 10 million pounds.
Coinbase Vice President of International Policy Tom Duff Gordon said in the September report: “Imposing caps on stablecoins is bad for U.K. savers, bad for the city and bad for sterling. No other major jurisdiction has deemed it necessary to impose caps.”
PYMNTS reported at the time that the BOE’s objective was to limit exposure of households, businesses and the banking system to systemic stablecoins until confidence, supervision and reserves are in place.
The ceiling for individuals is designed to ensure stablecoins remain a useful payments tool without becoming a mass savings instrument, while the limit for businesses is framed as proportionate to liquidity needs without letting firms bypass banks entirely.
On Wednesday (Oct. 1), it was reported that the BOE’s governor, Andrew Bailey, appeared to relax his position on stablecoins when he said it would be “wrong to be against stablecoins as a matter of principle,” while arguing for their potential for “driving innovation in payments systems both at home and across borders.”
“It is possible, at least partially, to separate money from credit provision, with banks and stablecoins coexisting and nonbanks carrying out more of the credit provision role,” Bailey said, adding that it is “important to consider the implications of such a change thoroughly before going ahead.”
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