Michaela
Crypto advocacy groups based in the United Kingdom have urged the Bank of England to reconsider its proposal to cap individual stablecoin holdings, warning the measure would be costly and difficult to enforce.
Key points:
- UK crypto groups push back against the Bank of England’s proposed stablecoin caps, calling them costly, hard to enforce, and potentially harmful to the country’s competitiveness.
- Central bankers argue caps are needed to prevent large withdrawals from traditional deposits, which could threaten credit availability and financial stability.
- Enforcement of individual stablecoin limits is complex, as issuers lack real-time visibility of token holders, making the process costly and operationally challenging.
According to a report by the Financial Times, the crypto groups pushed back against the Bank of England’s proposed stablecoin limits, warning the policy could hinder the country’s competitiveness compared with other jurisdictions. In a November 2023 discussion paper, the Bank suggested individual caps on digital pounds ranging from 10,000 to 20,000 pounds, roughly $13,000 to $27,000, and solicited feedback on a potential lower threshold of 5,000 pounds.
“Imposing caps on stablecoins is bad for UK savers, bad for the City and bad for sterling,” Tom Duff Gordon, vice-president of international policy at Coinbase, stated. “No other major jurisdiction has deemed it necessary to impose caps,” he added.
Simon Jennings, executive director of the UK Cryptoasset Business Council (UKCBC), argued that imposing individual stablecoin limits is impractical. He noted that issuers lack real-time visibility of token holders, making enforcement both complex and costly.
Central bankers warn that without limits, stablecoins could trigger large withdrawals from traditional bank deposits, potentially threatening credit availability and financial stability. UK regulators stress that these digital assets could disrupt the conventional financial system if left unchecked.
Bank of England Stablecoin Rules Could Impact SHIB Trading
For SHIB holders, the potential impact is clear. Stablecoins serve as one of the primary gateways for trading in and out of SHIB, acting as a bridge between fiat currencies and the token. If the Bank of England imposes caps or other restrictions on stablecoin holdings, UK-based traders could face reduced liquidity, making it harder to execute quick trades or respond to market movements.
Slower trading volumes could also lead to wider spreads and less efficient price discovery, affecting both short-term trading strategies and long-term investment plans. In essence, even though SHIB is not a stablecoin, tighter rules on stablecoins could indirectly constrain SHIB market activity and make it less flexible for holders to manage their positions.
This development spotlights how broader regulatory decisions in the crypto ecosystem can ripple across individual tokens, influencing everything from liquidity to investor confidence.
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Michaela has no crypto positions and does not hold any crypto assets. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.
