CBDC has been dismissed as governmental overreach by the Reform Party, which champions a thriving private stablecoin market.
The Bank of England’s proposal to cap stablecoin holdings and its broader plan to introduce a central bank digital currency (CBDC) have been formally rejected by the UK’s minority Reform party.
It was cautioned in a Sept. 18 statement on X by the party’s head of policy, Zia Yusuf, and party figurehead Nigel Farage that the measures would harm Britain’s competitiveness in the global digital economy.
A proposal to curb stablecoin holdings for individuals and businesses was put forth by the Bank of England last week. The draft would limit citizens to possessing between £10,000 and £20,000 in systemic stablecoins, while businesses would face a maximum cap of £10 million.
A claim is made by the regulator that the plan aims to reduce financial risks as digital assets become more mainstream.
However, the proposal was framed by Reform party leaders as an attack on innovation rather than a safeguard.
It was argued that limiting the use of stablecoins risks stifling demand for British government debt while strengthening the standing of international rivals.
According to the statement, significant liquidity is funneled into US Treasuries by dollar-pegged stablecoins like USDC and USDT, reinforcing the dollar’s supremacy in digital finance. By contrast, the UK possesses no equivalent mechanism to backstop demand for gilts.
“Now ask yourself: where is the British equivalent? Where is the pound-backed stablecoin with deep liquidity, one that global markets can trust, one that channels fresh demand into UK gilts? It doesn’t exist, because policymakers here have been openly hostile to innovators. Instead of building the future, Britain’s regulators have smothered it.”
Yusuf wrote:
It was argued by Yusuf that stablecoins are not a danger to financial stability. Instead, he characterized the assets as:
“[A] bridge between the digital world and the traditional banking system. A bridge between entrepreneurs and customers, between investors and opportunity. They are simply new wrappers around money – safer, faster, programmable money that can settle instantly across borders without costly intermediaries.”
The creation of a digital pound has also been strongly opposed by the Reform Party.
Reform Party Warns CBDC Would Grant Bank of England “Unprecedented Control” Over Financial Activity
According to the party, unprecedented control over financial activity would be granted to the Bank of England by a state-backed CBDC, stifling competition and discouraging private-sector innovation.
Instead, regulated, privately issued stablecoins are promoted as a means to spur growth without government entities gaining direct control over citizens’ wallets.
To support that approach, the party’s proposed Cryptoassets and Digital Finance Bill would be put forth to establish a clear and proportionate regulatory framework.
It is argued by Reform that by creating rules which balance consumer protection with market freedom, the UK could emerge as a leader in the global stablecoin race and generate new employment opportunities in fintech and digital finance.
Another step in the party’s embrace of crypto is marked by the stance. Earlier this year, the party became one of the first political groups in the UK to accept donations in Bitcoin and other digital assets.
