APPG Welcomes Bank of England Stablecoin Consultation but Raises Concerns on Holding Caps
Lord Vaizey, Co-Chair of the UK Parliament’s Crypto and Digital Assets All-Party Parliamentary Group (APPG), supported by CryptoUK as secretariat, has welcomed the Bank of England’s latest consultation on a regulatory regime for sterling-denominated systemic stablecoins, describing it as “a significant step towards providing the clarity and certainty investors need to set up and scale up in the UK and helping to drive innovation, competitiveness, and economic growth.”
He said it was “encouraging that the Bank has listened to industry feedback and revised some of its earlier proposals whilst also committing to deliver a UK regime as quickly as the US,” adding that the changes “send a positive signal that the UK wants to be competitive in digital finance.”
However, Lord Vaizey reiterated concerns about proposals to introduce caps on how much stablecoin individuals and businesses can hold – an issue he has raised previously in the House of Lords. While welcoming proposed exemptions from holding limits for large retailers and intermediaries, he said:
“I remain concerned about the proposals to introduce caps on how much stablecoin individuals and businesses can hold. No other major jurisdiction has such limits, and despite assurances they are temporary, there is no timeline for when they would be lifted.”
He added that while managing financial stability risks is essential, “we must ensure regulation enables innovation, not inhibits it,” and said the UK must strike “the right balance by creating a regime that is both safe and ambitious enough to secure the country’s leadership in the future of digital money.”
The Bank of England has proposed temporary holding limits to mitigate what it sees as financial stability risks as stablecoins enter mainstream use. The Bank of England has described the limits as transitional, saying they could be relaxed or removed once risks are better understood.
Industry groups have previously criticised the Bank’s proposals as overly restrictive, warning that the UK risks losing competitiveness to the US and EU, which have opted for more open frameworks, and that such limits could stifle innovation and drive activity overseas, undermining the UK’s goal of becoming a leading digital asset hub.
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