The Bank of England wants to put a leash on stablecoins. In its recent proposal, it suggested limiting how much individuals and businesses can hold in “systemic” stablecoins; roughly £10,000–£20,000 for individuals, and £10 million for firms.

The stated reason? Financial stability. The BoE fears that, without guardrails, stablecoins could trigger large outflows from traditional banks. That could weaken credit availability and destabilize the system, especially if people rapidly pull money out of deposits and into digital alternatives.

The proposal isn’t final, and the central bank calls it a “transitional” measure. A public consultation is expected later this year.

The pushback has been loud

The crypto industry isn’t buying it.

Coinbase and other industry players argue that this move would leave the UK out of step with the US and EU—neither of which imposes ownership limits on stablecoins. They also argue that enforcement would be a nightmare. Unlike bank accounts, stablecoins are held in wallets that issuers can’t always track. Monitoring balances across wallets would require intrusive systems like digital IDs or constant syncing—expensive, complex, and possibly incompatible with how crypto is designed to function.

Others point out the inconsistency. Why should there be a cap on stablecoins when no such limits exist on cash or bank accounts?

A wider regulatory tension

The proposal also highlights a bigger disconnect. On one hand, the UK government (especially the Treasury) wants to promote digital finance. On the other, the BoE is leaning toward caution and control. These caps would sit at the heart of that tension—between innovation and systemic safety.

Meanwhile, the US is pushing stablecoin legislation focused on issuer regulation and reserve backing. The EU’s MiCA rules also avoid balance caps and instead focus on transparency, risk, and redemption rights. The UK’s more conservative stance may end up isolating it, especially if other jurisdictions are more welcoming to stablecoin-based payments and commerce.

The outcome of the upcoming consultation will tell us which direction the UK chooses. But the message is clear: how a country regulates stablecoins may be just as strategic as how it regulates banks.

Key takeaways for fintech startups

• The BoE’s proposed stablecoin caps could impact startups building in payments, wallets, or digital assets in the UK.
  
  
• Enforcement could add major complexity, especially around wallet tracking, identity verification, or cross-border flows.
  
  
• The caps may clash with pro-innovation signals from the UK Treasury, creating regulatory uncertainty in the near term.
  
  
• Other jurisdictions (like the US and EU) are taking a different approach; potentially giving UK-based firms a reason to look abroad.
  
  
• The regulatory environment is still evolving, with a consultation due later this year. Now is the time to shape the conversation.

If your fintech startup is navigating regulation in the UK or beyond, Your Fintech Story can help you translate uncertainty into opportunity. Get in touch.