Bank of England stablecoin caps may choke the UK’s pound-token market before launch
A House of Lords committee has urged the Bank of England to rethink planned stablecoin caps and reserve rules before the UK regime is finalized. The committee supports 1:1 backing, audited reserves, and consumer safeguards, but says the Bank’s current proposals may be too restrictive for a nascent pound stablecoin market. Key concerns are temporary holding limits of £20,000 for individuals and £10 million for businesses, plus a rule requiring systemic sterling stablecoin issuers to hold at least 40% of backing assets as non-interest-bearing deposits at the Bank of England. The committee says these measures could make GBP stablecoins commercially unviable and push activity offshore or into dollar-denominated products. It recommends a more flexible, principles-based approach, with limits only if clear financial-stability risks emerge. It also asks the Bank to reconsider whether deposits at the Bank should earn Bank Rate and to clarify when a stablecoin becomes “systemic.”
