UK Stablecoin Rules Face Pushback

- The proposed holding limits are £20,000 for individuals and £10 million for businesses for any single "systemic" stablecoin. These limits are intended to be temporary to prevent large, rapid outflows from traditional bank deposits that could disrupt lending. - Issuers of sterling-denominated systemic stablecoins would be required to back their coins with a mix of assets: up to 60% in short-term UK government debt and the remaining 40% in unremunerated cash deposits at the Bank of England. - The regulatory framework is enabled by the Financial Services and Markets Act 2023, which brought certain cryptoassets and stablecoins under the regulatory authority of the Financial Conduct Authority (FCA) and the Bank of England. The FCA will oversee most stablecoins, while the Bank of England will regulate "systemic" ones that could impact the wider financial system. - Criticism has extended beyond just Coinbase, with The Payments Association, a trade body, arguing the proposals are overly cautious and will discourage the issuance of sterling-based stablecoins. A cross-party group of lawmakers from the House of Lords has also urged the government to oppose the caps, fearing they will drive capital and innovation abroad. - The consultation period for these proposals is open until February 10, 2026, with the Bank of England aiming to finalize the regulations in the second half of that year. - This stablecoin regulation is developing alongside the Bank of England's separate exploration of a central bank digital currency (CBDC), dubbed the "digital pound," for which a decision on next steps is also expected in 2026.