The Bank of England (BoE) has unveiled draft regulations that would cap individual stablecoin holdings at £20,000 and business holdings at £10 million. The proposal also mandates stablecoin issuers to keep 40% of their reserves in non-interest-bearing central bank accounts. Regulators cite risk control and financial stability, but the crypto industry is pushing back hard.
Armstrong Warns UK Risks Falling Behind
Coinbase co-founder and CEO Brian Armstrong took to X to denounce the framework, arguing it would "stifle innovation" in the digital economy. "The Bank of England's suggested caps for individuals and businesses risk closing the door to innovation," he wrote. His remarks have fueled a groundswell of support: the Stand With Crypto UK petition has collected over 80,000 signatures, calling for a more supportive crypto environment.
The draft rules, developed jointly by the BoE and the Financial Conduct Authority (FCA), are designed to prevent sudden capital outflows from the traditional banking system. But industry leaders counter that such constraints will hinder stablecoin adoption and push crypto-related businesses to relocate abroad.
MPs Voice Concerns, Hong Kong Accelerates
Several British Members of Parliament have echoed those worries, warning that the caps could "create unnecessary barriers to innovation, slow stablecoin adoption, and prompt crypto firms to move overseas." Armstrong's opposition also draws attention to his recent shift on a similar legislative proposal in the U.S., underscoring cross-Atlantic tension between policymakers and the crypto sector.
Meanwhile, Hong Kong is moving fast to become a regulated digital-asset hub. The region plans to issue its first stablecoin license in March, embracing a comparatively open regulatory approach that many see as more growth-friendly. Global stablecoin transaction volumes are surging, with significant growth expected through 2025. Fully licensed exchange HashKey has launched its ecosystem token HSK, expanding its market presence and bridging traditional finance with digital innovation.
Industry observers view the UK's regulatory uncertainty as a risk of falling behind in the global race for fintech leadership. Armstrong and his backers continue to advocate for a nuanced, competitive stance, warning that overly restrictive policies will drive innovative projects and talent to other jurisdictions.