Bank of England Weighs Stablecoin Withdrawal Caps

The Bank of England has outlined proposals to impose limits on stablecoin withdrawals, framing them as a transitional measure to safeguard financial stability. The central bank argues that caps could help prevent large and sudden outflows from banks, which might otherwise weaken credit provision. A public consultation on the plan is expected later this year.

Industry Pushback

The proposals have drawn criticism from industry voices including Coinbase and the UK Cryptoasset Business Council. They argue that stablecoin issuers are not equipped to reliably identify token holders, making enforcement impractical. According to critics, implementing withdrawal caps would require intrusive and costly systems such as digital IDs or constant wallet coordination, measures they say would undermine payments innovation and reduce the efficiency of cross-border transactions.

Policy Tensions Emerge

The debate underscores growing tensions between the Bank of England and the Treasury, as policymakers attempt to balance innovation with systemic safeguards. While the government is keen to position the UK as a hub for digital finance, regulators remain cautious about risks associated with the $288 billion global stablecoin market.