The UK will prohibit individuals from holding stablecoins outside the regulated financial system. Speaking at a House of Lords Committee hearing on systemic stablecoins, Bank of England Deputy Governor Sarah Breeden confirmed that self hosted wallets will not be permitted under the UK’s stablecoin regime. The ban would apply across all stablecoins, not only those designated as systemic.
“There is this concept of an unhosted wallet, where you haven’t got a wallet provider who is a regulated entity ensuring that AML, KYC criteria are complied with. Unhosted wallets will not be permissible in the UK. They are permissible in the US regime,” Breeden said.
Self hosted wallets allow individuals to hold assets directly without using an intermediary, and are a foundational feature of blockchain technology. Their prohibition is significant. The committee did not linger on the point. That a government would prohibit individuals from holding stablecoins outside the financial system passed without debate. The hearing’s energy was reserved for a different question, one with no current practical effect.
Systemic stablecoin rules would not affect current stablecoin usage at all. They are designed for a future in which a stablecoin becomes widely used in everyday payments, not for existing crypto transactions. The Bank of England has proposed limits of £20,000 for individuals and £10 million for businesses, and has received extensive pushback from industry.
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