Coinbase Executive Urges UK to Reconsider Sterling Stablecoin Caps

Coinbase urged UK regulators to reconsider proposed limits on sterling stablecoin holdings, warning that strict caps could curb innovation. Tom Duff Gordon, Coinbase’s Vice President for International Policy, told the House of Lords Financial Services Regulation Committee that the UK risks falling behind if rules remain overly restrictive. He stressed that the details of the regulatory framework will shape London’s financial prominence over the next decade.

Duff Gordon highlighted the Bank of England’s plan to limit individual holdings to £20,000 and business holdings to £10 million. He argued these thresholds are insufficient for stablecoins to operate as meaningful settlement infrastructure. 

He emphasized that such limits could prevent stablecoins from facilitating tokenized bond and gilt transactions efficiently. Consequently, sterling stablecoins might struggle to gain relevance in capital markets.

Five Recommendations for a Competitive Framework

During the hearing, Duff Gordon outlined five recommendations to strengthen the UK stablecoin framework. He called for removing holding limits, allowing a larger share of reserves in short-term UK government debt, and enabling stablecoins for wholesale settlement. 

Additionally, he encouraged regulators to align rules internationally and permit platforms like Coinbase to reward stablecoin holders. These measures aim to enhance usability while maintaining financial stability.

Stablecoins can reduce cross-border transaction costs and accelerate domestic payments, he noted. Compared to traditional card rails, stablecoins offer almost instant settlement at minimal cost. 

Furthermore, moving real-world assets onto blockchain networks will require corresponding tokenized cash instruments. Sterling-denominated stablecoins could boost the pound’s global role, challenging the current dominance of dollar-pegged digital tokens.

Ensuring Stability and Practical Implementation

Duff Gordon acknowledged potential financial stability risks but highlighted differences from traditional banks. Unlike banks, stablecoins are fully reserved and avoid maturity transformation, making runs less likely and less severe. The Bank of England’s proposed liquidity facility would allow issuers to repo high-quality liquid assets for cash during stress, preventing forced asset sales.

Keith Grose, Coinbase UK CEO, emphasized that practical implementation matters. Clear authorizations, proportionate rules, and reliable banking access are vital to keeping activity onshore. 

Without clarity, firms may move operations offshore. Well-designed regulation could maintain trust, foster innovation, and ensure the UK competes in next-generation payments while reinforcing sterling’s digital economy role.