Bank of England Exempts Crypto Firms from Stablecoin Limits
- The Bank of England (BoE) will allow waivers for crypto exchanges needing large stablecoin inventories for market-making and settlement.
- Proposed limits on stablecoin holdings were set at £10,000 to £20,000 per individual and £10 million per firm, deemed unworkable by the industry.
- Exemptions will help UK exchanges maintain centralized inventories, preventing the fragmentation of client assets across multiple entities.
- Larger stablecoin balances are expected to enhance liquidity for Bitcoin and Ethereum trading by allowing tighter bid-ask spreads.
- The FCA has lifted a retail ban on crypto exchange-traded notes (ETNs), enhancing retail access to crypto investment products in the UK.
The BoE’s decision to exempt certain firms from stablecoin limits aims to keep significant liquidity onshore while addressing operational needs of exchanges and market makers. This regulatory shift could drive more capital into the cryptocurrency markets, particularly benefiting Bitcoin and Ethereum trading activities.
With exemptions allowing centralized stablecoin inventories, UK exchanges can now better facilitate transactions without exceeding proposed caps, which is crucial given that mid-sized platforms handle hundreds of millions daily. (Source)
