• BoE plans stablecoin caps with exemptions for exchanges and major crypto firms.
• Exception clauses aim to balance risk control and innovation in digital payments.
• Industry warns restrictions could weaken UK’s competitiveness in global crypto finance.

The Bank of England (BoE) is moving ahead with plans to impose limits on stablecoin holdings, but will introduce exemptions following industry criticism.

While the regulator seeks to contain financial risks in digital assets, the revised framework may allow certain crypto firms to maintain larger reserves and use stablecoins for settlement within regulatory sandboxes.

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BoE Moves to Cap Stablecoin Holdings with Industry Carve-outs

The Bank of England is preparing to introduce limits on stablecoin holdings. The goal is to strengthen oversight of digital money while preserving financial stability.

Under the draft framework, individuals could hold up to $13,400-$26,800 (£10,000–£20,000 ) in stablecoins, and businesses up to $13.5 million (£10 million).

However, after widespread industry objections, the BoE is reportedly planning to include exemptions for crypto exchanges, custodians, and fintech firms that rely on larger stablecoin reserves for operational liquidity.

Officials familiar with the matter told Bloomberg that the measure is not intended to restrict legitimate market activity. Instead, it seeks to “contain systemic risk” as stablecoins become increasingly integrated into mainstream payment systems.

The revised framework may differentiate between stablecoins used for consumer payments and those employed by institutional actors for settlement or liquidity management.

The central bank has signaled that the final proposal will be open to public consultation later this year. Implementation is expected to be phased in during 2026.

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Exemptions and Integration into Digital Securities Sandbox

The BoE’s updated plan will include “exception clauses.” These would let firms viewed as critical to crypto infrastructure hold stablecoin reserves above the general cap.

The carve-outs aim to support market makers, exchanges, and blockchain projects working in the UK’s Digital Securities Sandbox. The sandbox serves as a regulatory testbed where firms can experiment with digital settlement and tokenized assets.

The sandbox is jointly overseen by the BoE and the Financial Conduct Authority (FCA). It forms part of the UK’s broader push to modernize capital markets with distributed ledger technology. Allowing stablecoins to act as settlement assets will help the BoE test its role in future wholesale payments and tokenized securities markets.

“The UK’s approach recognizes that stablecoins will be essential to real-world asset tokenization,” said Stani Kulechov, founder of Aave, in a post on X (formerly Twitter).

He described the BoE’s revised stance as “a necessary balance between risk control and innovation.”

For now, the inclusion of exemption carve-outs signals a more pragmatic approach. This suggests the UK intends to remain a major hub for digital finance while upholding its prudential standards.

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