The Bank of England moved to calm industry concernsthis week, emphasizing that proposed limits on stablecoin holdings andtransaction sizes are only temporary.Digital assets meet tradfi in London at the fmls25The central bank aims to give the financial systemtime to adjust while allowing stablecoins to play a role in the UK’smulti-currency payments system. In a speech at DC Fintech Week, Deputy Governor SarahBreeden said the central bank’s measures are designed to ensure stabilityrather than restrict innovation."All of these are intended to be temporary to allow the structure of real-economy financing to adjust – and to enable the Bank to monitor adoption of stablecoins and assess the potential for rapid changes in the structure of the financial system,” sheexplained, noting that rapid shifts could otherwise destabilize the bankingsystem.Industry Pushback on Proposed LimitsIndustry groups had widely criticized the initiallyproposed thresholds, between $13,429 and $26,858 (10,000–20,000 Britishpounds), arguing that such caps would signal that the UK is unfriendly to cryptobusinesses. Critics warned that this could drive innovation and investmentoverseas, slowing the adoption of digital finance solutions in the country.Breeden confirmed that the Bank of England will launcha consultation before the end of the year. “We will be consulting in the coming weeks on the details of our proposed regime for sterling stablecoins used in systemic payment systems, and we’ll be open to feedback as we finalize our rules,” she said.You may also like: Stablecoins, UK Policy Clashes, and Retail Crypto’s Rise: Could ETFs and CFDs Be Next?Proposals under discussion include higher limits forbusiness accounts, exemptions for supermarkets and large firms, and carveoutsfor participants in the UK’s digital sandbox, launched in October 2024.Financial Stability Remains the PriorityThe Bank’s key concern is that a rapid shift of fundsfrom traditional bank deposits into stablecoins could cause a sudden drop incredit for households and businesses. Breeden noted that this risk isparticularly acute in the UK, where credit relies heavily on banks, unlike inthe US.She stressed that central bank-backed money willcontinue to play a central role in wholesale payments and asset settlements.However, she acknowledged that tokenized markets will likely see a role forregulated stablecoins and tokenized deposits in the future.The Bank of England’s approach signals a cautious yetopen stance, balancing innovation with financial stability, and leaving thedoor open for collaboration as stablecoins continue to evolve in the UK market.This article was written by Jared Kirui at www.financemagnates.com.