Bank of England Eases Fears Over Stablecoin Limits

The Bank of England said that it plans to lift the limits once stability is ￰0￱ Governor Sarah Breeden explained that the restrictions are there to prevent sudden liquidity shifts from banks to stablecoins and confirmed that a public consultation will be held later this year. Meanwhile, in Europe, Franco-German banking group ODDO BHF launched EUROD, a euro-pegged stablecoin under the EU’s MiCA ￰1￱ EUROD joining other recent euro-backed launches, it is clear that Europe is pushing to strengthen its role in the global stablecoin ￰2￱ Caps Will Be Temporary Bank of England Deputy Governor Sarah Breeden reassured the crypto industry that the central bank’s proposed restrictions on stablecoin holdings and transaction sizes will be temporary measures to ensure a smooth and stable transition for the financial ￰3￱ DC Fintech Week on Wednesday, Breeden explained that the limits, which were initially introduced in a 2023 discussion paper, are not meant to be permanent barriers but short-term safeguards to prevent disruption as stablecoins become integrated into the broader ￰4￱ said that the limits were previously floated to range between £10,000 and £20,000 (about $13,400 to $26,800), and were designed to give the financial system time to adapt to the rise of ￰5￱ to Breeden, the Bank’s primary concern is that a sudden shift of funds from bank deposits into stablecoins could reduce credit availability for businesses and households, leading to ￰6￱ Breeden “Our starting point is that applying limits to a user’s holdings of a given systemic stablecoin is the best way to avoid such a precipitous reduction in the availability of credit to UK borrowers,” she ￰7￱ added that once the financial system adjusts, these restrictions will be lifted, as the Bank ultimately wants to “support a role for stablecoins as part of a multi-money ￰8￱ in the Industry strongly criticized the proposed limits, and warned that such restrictions could send the wrong message about the UK’s openness to innovation and drive crypto-related businesses ￰9￱ response, Breeden said the Bank will launch a public consultation before the end of the year to gather some more feedback on the proposed limit levels and possible ￰10￱ the ideas being discussed are higher thresholds for businesses and carveouts for companies operating in the UK’s digital sandbox, a government initiative launched in 2024 to test blockchain and digital ledger ￰11￱ also clarified that while stablecoins and tokenized deposits will likely play a bigger role in future markets, the Bank of England intends to keep its role as the sole provider of settlement for wholesale and asset market transactions to avoid unnecessary interconnections that could threaten financial ￰12￱ called on both traditional financial institutions and crypto innovators to collaborate with the central bank in shaping a resilient and inclusive financial system for the digital ￰13￱ BHF Launches Euro Stablecoin In other parts of Europe, Franco-German banking group ODDO BHF entered the digital asset market with the launch of its own euro-backed stablecoin, ￰14￱ makes it one of the first traditional European banks to issue a stablecoin under the European Union’s Markets in Crypto-Assets (MiCA) ￰15￱ initiative was announced on Wednesday , and positions ODDO BHF as the issuer of the token, with Flowdesk providing liquidity services and Fireblocks supplying the tokenization ￰16￱ stablecoin will be listed first on Spanish crypto exchange ￰17￱ BHF announcement Guy de Leusse, deputy chief operating officer at ODDO BHF, said the goal of the move is to provide a distinctly European alternative to the dominance of dollar-based stablecoins like Tether’s USDT and Circle’s USDC.

“We felt it was essential to offer a European solution denominated in euros to provide an alternative to stablecoins denominated in US dollars,” he ￰18￱ stablecoins dominating the market () ODDO BHF formed in 2016 through the merger of France’s ODDO bank and Germany’s BHF-BANK, and it operates across France, Germany, Switzerland, and ￰19￱ also has a long-standing presence in European finance dating back to the 19th ￰20￱ launch of EUROD is another step in the movement toward euro-pegged digital assets across the continent. Europe’s stablecoin landscape gained momentum this year after Société Générale’s introduction of the EUR CoinVertible in April, and AllUnity’s release of the regulated EURAU stablecoin in July, backed by Flow Traders, Deutsche Bank’s DWS, and ￰21￱ European banks also announced plans to release a joint euro-backed stablecoin by ￰22￱ suggest that while USD-backed stablecoins still account for more than 83% of the global $316 billion stablecoin market, euro-denominated alternatives are gaining attention as Europe accelerates its digital currency ￰23￱ Kotecha, co-founder of Paxos Labs, said that European issuers will need strong partnerships and liquidity strategies to compete with their US counterparts.