The Bank of England's plan to "limit stablecoin holdings" has caused public outrage: It will not work at all and will only fall behind the global encryption competition.

The British cryptocurrency advocacy team has strongly criticized the Bank of England's proposal to limit the number of stablecoins held by individuals, arguing that the plan is difficult and costly to implement and may cause the UK to lag behind other jurisdictions in the global digital currency race.
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/>(Background supplement: The Bank of England warned that stablecoins are toxic, emphasizing the return of currency to the central government and the tokenization of deposits)

According to the British "Financial Times" report, the British cryptocurrency advocacy team strongly criticized the Bank of England (BoE, BOE) proposal to limit the number of stablecoins held by individuals, believing that the plan is difficult and costly to implement, and may cause the UK to lag behind other jurisdictions in the global digital currency race.

Bank of England Stablecoin Holding Limit Plan

According to a discussion paper released by the Bank of England in November 2023, the Bank proposed to set limits on individual holdings of digital pounds (in the form of stablecoins). The initial plan is to set the upper limit between 10,000 pounds and 20,000 pounds, and publicly solicit opinions to consider whether to further reduce the lower limit to 5,000 pounds.

The Bank of England stated that setting an individual holding limit is to reduce the financial risks that stablecoins may cause, such as bank runs, and hopes to collect opinions from all walks of life on this policy through public consultation.

In addition, Ronit Ghose, Citibank’s head of future finance, also warned at the end of August that if stablecoins start paying interest on deposits, it may repeat the history of US money market funds sucking away bank deposits in the 1980s.

The opposition is fierce

However, as cryptocurrencies are increasingly moving towards mainstream finance, many sovereign countries and companies around the world are also actively exploring the supervision, issuance and application of stablecoins. Therefore, the current criticism of the Bank of England's plan has become increasingly intense. The Financial Times pointed out that many British cryptocurrency industry groups and individuals have expressed strong opposition to the Bank of England’s proposals, believing that its restrictions are unrealistic and will do more harm than good.

For example, Simon Jennings, executive director of UKCBC (UK Cryptoasset Business Council), made it clear that stablecoin holding restrictions are “unworkable in practice.” He pointed out that stablecoin issuers cannot instantly track the identities of token holders, and enforcing individual holding caps requires the establishment of a costly and complex new system. In addition, Jennings also emphasized that UKCBC is promoting the establishment of a "transatlantic corridor for stablecoin payments" between the United Kingdom and the United States, and that the Bank of England's restrictions will seriously affect the effectiveness of this plan.

At the same time, Coinbase Vice President of International Policy Tom Duff Gordon also criticized that stablecoin holding restrictions are detrimental to British savers and the pound itself. He said that no major jurisdiction in the world has implemented similar restrictions. If the UK insists on implementing it, it may damage the attractiveness of its digital currency market and weaken the pound's position in international payments.

In addition, Bitwise investment director Matt Hougan also suggested that banks should respond to competition from stablecoins by raising deposit rates rather than relying on restrictive measures. George Osborne, the former British Chancellor of the Exchequer and now a cryptocurrency lobbyist, also warned that the UK has lagged behind other countries in the digital asset market, especially in the field of stablecoins, and excessive regulation may further widen the gap.