Coinbase criticizes UK restrictions on stablecoins and warns of capital outflow risk

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Coinbase criticizes UK restrictions on stablecoins

Bank of England proposes holding limits on stablecoins

Under the draft regulations, individuals in the UK would be allowed to hold up to £20,000 in the largest British stablecoins, while companies would be capped at £10 million. Issuers would be required to keep the majority of reserves in short-term government bonds and central bank accounts.

The Bank of England says the measures are intended to reduce systemic risks and protect users. However, critics, including Coinbase, argue that the limits could constrain scaling and reduce market liquidity. Some UK lawmakers have also warned that excessive regulatory rigidity could push companies to relocate abroad.

Stablecoins become a key revenue source for Coinbase

In 2025, Coinbase generated $1.35 billion in revenue from stablecoins, up from $911 million the previous year, with $364 million earned in the fourth quarter alone. Despite reporting a quarterly net loss, stablecoins became the company’s most stable source of profit. Revenue is driven by interest income on reserves and partnerships with issuers, primarily USDC.

Coinbase is also using this cash flow to expand into tokenized assets and 24/7 trading services. The company emphasizes that limits on stablecoin holdings could directly affect the scale of its operations in the UK.

Global stablecoin market dynamics and jurisdictional competition

Global stablecoin market capitalization surpassed $300 billion in 2025, while annual transaction volume reached approximately $33 trillion — comparable to the turnover of major payment networks. In the United States, the adoption of the GENIUS Act established a federal framework for issuing fully backed stablecoins, boosting institutional capital inflows. Bloomberg Intelligence analysts previously estimated that, under favorable regulation, Coinbase’s stablecoin revenue could grow two to seven times in the coming years.

Against this backdrop, the introduction of strict limits in the UK could restrict participation by large companies and banks, as operational scale directly impacts the economic efficiency of using digital dollars. Diverging regulatory approaches between the US and the UK are intensifying competition for crypto business, and the future distribution of liquidity will depend on which jurisdictions offer more predictable operating conditions.

Recently we wrote that Meta Platforms Inc. is preparing to integrate third-party stablecoins for payouts to content creators across Facebook, Instagram, and WhatsApp in the second half of 2026. The initiative aims to streamline international payments, particularly smaller transfers of around $100 that are currently burdened by high banking fees and foreign exchange costs.

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