During a speech yesterday, Sir Jon Cunliffe, Deputy Governor of the Bank of England, said stablecoins may need holding limits. He also outlined why they would not receive deposit protection and questioned how public blockchain stablecoins could comply with future regulations. As context, this year’s Financial Services Markets Act gave the Bank the power to regulate systemic stablecoins. Now the Bank is about to share a discussion paper on proposed regulations.
The central bank digital currency (CBDC) currently being explored by the Bank of England has proposed holding limits of £10-20,000 ($12-24k), a figure the banking sector believes is too high. In contrast, the EU is currently considering a €3,000 limit. By setting limits it discourages a rapid shift from bank deposits into a CBDC, which could destabilize banks.
Sir Jon mentioned stablecoin limits and hinted that CBDC holding limits may not persist.
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