Bank of England Caps Stablecoin Restrictions at £20K: What Constitutes a ‘Systemic Stablecoin’?
Today (November 10), the Bank of England unveiled its regulatory framework concerning systemic stablecoins in a consultation document detailing its proposals.
This news has already sparked significant discussion on Crypto Twitter regarding the specific scope of these ‘systemic stablecoins’, with many pointing out the intentional vagueness of the language used – the press release itself merely mentions ‘UK stablecoins’.
One possible interpretation suggests that ‘systemic stablecoins’ could refer to any stablecoin eligible for usage on UK financial products, including exchanges, custodians, and Decentralized finance protocols, as well as any stablecoin utilized for the payment of goods, services, or income to individuals in the UK.
A second interpretation hinges on a headline from a document that mentions ‘GBP-denominated stablecoins’. While not elaborated further in the text, which refers to HM Treasury for the classification of ‘systemic stablecoins’, it implies a demarcation focused on GBP-backed stablecoins.
Interestingly, there are two GBP-backed stablecoins available, VGBP and CGBP, with a total value of just $500,000 and a daily trading volume of merely $10,000 combined – raising a larger question: has the Bank of England genuinely dedicated three years to scrutinizing a trading market with such a low valuation, or is this a preliminary step towards a broader stablecoin framework?
The proposals are grounded in insights gathered from the Discussion Paper released in November 2023. While the BoE asserts that it aims to foster public confidence in the evolution of monetary payment innovations, the set cap of £20,000 per individual on UK stablecoin holdings paints a contrasting picture, particularly as Kier Starmer and the UK Government persist in stifling the nation’s FinTech advancements.
In its press release, the BoE points out that the suggested framework will not encompass stablecoins intended for non-systemic functions, and firms issuing non-systemic stablecoins will operate under the compliance of the FCA.
If recognized as systemic by HM Treasury (HMT), these stablecoins will fall under the supervision of the Bank, which will manage prudential and financial stability risks, alongside the FCA overseeing consumer protection and conduct matters.
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What does systemic stablecoin actually signify?
The Bank of England paper specifies that ‘systemic stablecoins’ are those significantly utilized in payments and considered a risk to the financial stability of the UK by HM Treasury.
Importantly, this definition does not indicate a GBP-only stipulation; indeed, the sole criterion in this legal definition is that the stablecoin is used for payments within the UK.
A skeptical viewpoint might suggest that this serves as a ‘soft-entry’ for a broader crackdown on stablecoins, allowing HM Treasury to exert authority over classifications, creating a potentially expandable capture under the guise of the limited parameters of the GBP stablecoin trading market.
Moreover, USD-denominated stablecoins currently dominate the landscape of UK crypto finance, acting as the main trading pair on British exchanges and the preferred method of payment/settlement for individuals heavily involved in the UK’s crypto realm.
The British government is not unfamiliar with this scenario. Law enforcement in the UK has been seizing cryptocurrencies, including stablecoin assets like USDT and USDC, for numerous years, demonstrating awareness of the significant presence of USD-stablecoins.
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Additionally, issuers identified as systemic upon launch, or those transitioning from the FCA’s framework, may initially allocate up to 95% of their backing assets to short-term UK government debt to enhance their stability as they develop. This means that any entity creating a GBP-backed stablecoin within this framework must adhere to these stipulations.
Furthermore, the Bank of England is contemplating central bank market fluidity provisions to assist systemic stablecoin issuers during turbulent times. Such measures would boost financial stability by providing a buffer in scenarios where systemic issuers cannot liquidate their backing assets in private markets.
No, the Bank of England hasn’t set a £20,000 limit.
It’s a temporary proposal within its new consultation (published today) on systemic stablecoins, designed to manage risks from large outflows of bank deposits as digital money adoption grows.
The concern is that if too much…
— CryptoUK
(@CryptoUKAssoc) November 10, 2025
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£20,000 Holding Cap: The Actual Focus of the Bank of England Stablecoin Document
The Bank of England asserts that the £20,000 holding cap for each systemic GBP-backed stablecoin is meant to “Ensure ongoing access to credit as the financial system slowly adjusts to emerging digital monetary forms.”
A £10M holding limit has also been suggested for businesses (with a process for exemptions allowing larger companies to long-term holding more if required). These caps are expected to be lifted once the transition no longer endangers financing to the real economy. In addition, these restrictions will not apply to stablecoins used for executing transactions in wholesale financial markets within the Bank and FCA’s Digital Securities Sandbox.
While the BoE has put forth some flowery statements regarding these holding caps, it serves as further proof of the stringent control the UK is imposing on its citizens, enveloping future GBP-backed stablecoins in bureaucratic regulations and limitations that prevent them from being viable investment options for the average person.
Alongside the proposed digital ID initiatives, the UK appears to be propelling itself towards self-destruction by curtailing FinTech progress while simultaneously encroaching on its citizens’ liberties.
bank of england proposing a £20k cap on pound stablecoins is like putting a speed limit on unicycles, no-one is using them anyway
— Ye Olde Intern (@blockscribbler) November 10, 2025
A Strategic Move to Bypass the Bank of England and Its Stifling Stablecoin Restrictions
Essentially, the simplest way to evade the Bank of England and its nonsensical £20,000 holding cap is to straightforwardly decline to trade or possess any recognized ‘systemic stablecoins’.
Why would someone opt to hold a GBP-backed stablecoin, or, for that matter, an established USD-backed cryptocurrency such as Tether’s USDT or Circle’s USDC, when the UK is introducing measures to limit access through antiquated attitudes towards the integration of digital assets?
With such a vast array of stablecoins in the trading market, it appears certain that there will be a multitude of easily accessible and liquid stablecoins not yet classified as ‘systemic’ for many years to come to preserve wealth in (*cough* DAI *cough*).
For citizens of the UK, it’s apparent that neither the government nor the Bank of England is making any effort to attract investors to stablecoins; in fact, they seem to be pushing individuals further into the grasp of the arcane USD-denominated tokens, effectively eliminating any chance of a digital GBP marketplace.
The UK has significant ground to cover, as the total trading market capitalization of USD-backed stablecoins surpasses $300Bn, with daily trading volumes exceeding $113Bn. These figures are anticipated to continue rising swiftly as the US Government introduces its GENIUS Act, expected to clarify and promote the broader adoption of stablecoins.
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