UK Softens Stablecoin Rules, Keeps Caps
The UK is rolling out a comprehensive crypto and digital asset regulatory framework while deepening transatlantic coordination with the US on stablecoins and tokenized finance.
The UK published updated stablecoin regulatory rules that soften certain requirements relative to earlier proposals but retain market cap constraints that analysts described as potentially limiting the scale of the domestic stablecoin market.
UK Stablecoins: capped out!
The Bank of England dropped the rules that genuinely couldn't work — per-user holding limits are nearly impossible to enforce across wallets — and replaced them with a single £40 billion ceiling on each systemic sterling token.
That sounds generous. The problem is that stablecoin networks only become useful at scale: more users attract more merchants, deeper liquidity, more integrations. The network effect is the whole product. A hard ceiling that kicks in before those effects mature leaves you with a coin that is perfectly safe and almost completely pointless for the cross-border and wholesale settlement that would justify building it.
The BoE calls the cap temporary. Maybe so. But sterling already represents 0.5% of a $315 billion global market dominated by dollar tokens with no ceiling at all. The UK just made its stablecoin rules survivable. It hasn't yet made them competitive.
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- The UK softened stablecoin rules, but may still be capping its own market · cryptoslate.com · T2