Your Stablecoin Wallet Could Be Capped at £20,000 Under New Bank of England Plan
The Bank of England has laid out its first major plan to regulate stablecoins, proposing a £20,000 holding limit for individuals and a £10 million cap for businesses.
The central bank warns that without these and other strict rules, the new digital currencies could trigger a wider financial crisis and a credit crunch, making it harder for people and businesses to borrow money.
Deputy Governor Sarah Breeden stated the U.K. is taking a cautious path to avoid the kind of problems seen in the US. The key proposal requires stablecoin companies to hold 40% of their funds in a secure account at the Bank of England, ensuring money is available when users want to withdraw.
This measure is a direct response to the 2023 incident where the USDC stablecoin temporarily lost its value after part of its reserves were trapped in the failed Silicon Valley Bank. “Look at what happened with SVB and Circle,” Breeden said, justifying the strict new rules.
