Bank of England Plans Stablecoin Cap Exemptions

• Lyla Velez
• October 8, 2025
• Policy
• 0 Comments

Bank of England’s Strategic Move

The Bank of England’s proposed exemptions respond to industry concerns over previous stablecoin holding caps that risked UK exchanges’ liquidity. Exemptions will allow crypto exchanges and institutions to maintain substantial stablecoin balances for operations. The move signifies a shift in the UK’s regulatory stance, focusing on fostering a competitive stablecoin environment.

“The proposed exemptions signal our commitment to enhancing liquidity for institutional players while ensuring we remain competitive with other global markets.” – Andrew Bailey, Governor, Bank of England

Exchanges and institutional players are expected to benefit substantially, aligning UK policies closer to those in the US and EU. Market liquidity for stablecoins like USDT and USDC is predicted to increase within UK platforms, boosting trading activity. The financial impact includes improved liquidity, attracting more institutional participation in the UK market. Politically, the decision shows a UK commitment to adapting its regulations to global crypto industry standards.

The historical context includes similar adjustments by the US and EU, reflecting competitive pressure on the UK. Regulatory flexibility is anticipated to enhance appeal for crypto firms operating in or entering the UK. Financially, this could facilitate inflows into stablecoin markets, influencing overall crypto trading volumes. Technologically, UK platforms may see improved settlement and liquidity management capabilities, benefiting from these policy changes. The final rules will support systemic stablecoins in the UK, encouraging growth and innovation in the sector.