Lobbying for Stablecoin Ownership Changes
Cryptocurrency companies are reportedly urging the Bank of England to reassess its ownership limitations regarding stablecoins. Currently, the UK has stricter regulations compared to the US and the European Union, as noted by the Financial Times on September 15th.
The Bank of England intends to propose caps on individual stablecoin ownership ranging from £10,000 to £20,000 (about $13,600 to $27,200), with businesses facing a limit of £10 million. These limits would specifically apply to stablecoins that are either widely used for payments in the UK or are expected to see significant use in the future.
This initiative has faced backlash from various crypto and payment companies. Critics argue it could put the UK at a competitive disadvantage and make compliance challenging and costly.
“Capping stablecoin ownership is detrimental to UK savers, cities, and the value of the pound,” remarked Tom Duff Gordon, Vice President of International Policy at Coinbase. He pointed out that similar jurisdictions aren’t imposing such restrictions.
The central bank claims these ownership caps could evolve as the financial system adapts to the growing use of stablecoins.
Other voices in the industry say that these limits may obstruct the potential advantages of stablecoins, like enhancing cross-border payments.
“These limits are impractical,” Simon Jennings, Executive Director of the UK CryptoAsset Business Council, noted. He added that stablecoin issuers maintain awareness of token holders, making the enforcement of such caps complex and costly, involving constant updates between digital identities and wallets.
Meanwhile, several companies, including Sophie, Coinbase, Visa, PayPal, and Robinhood, are focusing on expanding the role of stablecoins in cross-border payments, as reported on August 4th.
“Cross-border payments represent a vast and inefficient market,” the report indicates, highlighting issues like delayed transactions, high fees, and dependence on intermediaries. Stablecoins could offer a way to tackle these challenges effectively.
