BOE’s Stablecoin Cap: Temporary or a Permanent Joke?

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The Bank of England, that paragon of prudence and efficiency, has finally deigned to publish its long-awaited consultation paper on stablecoins, which is sure to be as thrilling as watching paint dry. 🧠💰

BOE Moves Forward With Stablecoin Holding Limits

On Monday, the Bank of England released a new consultation paper, which is about as exciting as a teakettle whistle. The framework, built on feedback from November 2023, aims to modernize UK retail payments with the enthusiasm of a man trying to herd cats. 🐱

The BOE’s new rules are “robust, future-proof,” which, in layman’s terms, means they’re probably going to be as flexible as a brick. The central bank’s goal? To cap stablecoin ownership to “mitigate financial stability risks.” Translation: “Let’s stop people from hoarding digital cash like it’s the last loaf of bread in a zombie apocalypse.” 🧺

As reported by Bitcoinist, the BOE has been pondering restrictions on stablecoin ownership for months, proposing limits of £10,000 to £20,000 for individuals and £10 million for businesses. It’s like the Bank of England is trying to turn the UK into a digital version of a savings account. 💸

Crypto enthusiasts, ever the drama queens, have criticized the proposal, claiming it puts the UK at a disadvantage against the US and EU. One can only imagine the chaos if the UK were to compete with such titans of innovation. 🇺🇸🇪🇺

Following the backlash, the BOE is now considering exemptions for businesses that need to hold large amounts of stablecoins, like crypto exchanges. It’s as if they’ve realized that not every business wants to be a penny-pinching retiree. 🧑‍💼

The consultation paper confirms the holding limits, which are “temporary” and will be removed “once the transition no longer poses risks.” A temporary fix for a permanent problem? Classic BOE. 🔄

New Regime Eyes Joint Regulatory Approach

The regime will only apply to sterling-pegged stablecoins, while non-systemic ones will be handled by the FCA. It’s like having two different teachers for the same class. 📚

The BOE and FCA will collaborate, with a document set to be published in 2026. “If recognized as systemic, they’ll be jointly regulated,” the Bank explained. It’s like a partnership between a strict headmaster and a lenient tutor. 🧑‍🏫

The BOE suggests that systemic stablecoin issuers can hold up to 60% of backing assets in short-term UK government debt. It’s like telling a pig to eat a salad-unusual, but perhaps necessary. 🐖

Issuers will have unremunerated accounts at the BOE for the remaining 40%, ensuring “robust redemption” even under stress. It’s the financial equivalent of a life jacket in a hurricane. ⛑️

A new policy proposes central bank liquidity arrangements for issuers in times of stress. It’s like having a safety net, but only if you’re a bigwig. 🎩

Sarah Breeden, Deputy Governor for Financial Stability, said the BOE’s goal is to “support innovation and build trust.” One can only hope that “trust” isn’t the same as the trust you place in a man who promises to fix your car but then disappears. 🚗

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2025-11-11 09:15