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Proposals would give UK much stricter rules for market than US or EU

Cryptocurrency groups are calling on the Bank of England to abandon plans to limit how many stablecoins people can own, which would give the UK much stricter rules for the fast-growing market than the US or EU.

The central bank’s plan to restrict stablecoin ownership reflects concerns that the tokens could weaken the banking system by draining it of deposits and underscores how the UK has been more cautious on crypto regulation than other countries. 

BoE officials said it planned to press ahead with proposals for imposing ownership limits of £10,000 to £20,000 for individuals and £10mn for businesses on all systemic stablecoins — defined as any widely used for UK payments or likely to be in the future.

However, the plan has drawn criticism from cryptocurrency and payment groups, which said it would put the UK at a disadvantage compared with other countries and would be difficult and costly to enforce on the market. 

“Imposing caps on stablecoins is bad for UK savers, bad for the City and bad for sterling,” said Tom Duff Gordon, vice-president of international policy at Coinbase, the US crypto asset exchange. “No other major jurisdiction has deemed it necessary to impose caps.”

Other crypto industry executives said the BoE’s limits would be hard to implement and hamper the potential benefits of stablecoins — such as making cross-border payments cheaper and faster. “Limits simply don’t work in practice,” said Simon Jennings, executive director of the UK Cryptoasset Business Council trade body.

“Stablecoin issuers don’t have sight of who holds their tokens at any given time, so enforcing caps would require a costly, complex new system, such as digital IDs or constant co-ordination between wallets,” he said.

The criticism threatens to intensify tensions between the BoE and the Treasury after the central bank’s governor Andrew Bailey intervened to stop a meeting by chancellor Rachel Reeves to encourage regulators to speed up fintech Revolut’s banking licence.

Reeves has committed to support digital innovation in UK financial services and said in her Mansion House speech in July she would “drive forward developments in blockchain technology, including tokenised securities and stablecoins”.

The BoE has said its proposed limits on stablecoin ownership could be “transitional” while the financial system adjusts to the growth of digital money. It is due to publish a consultation outlining its updated plans for stablecoin regulation this year.

Sasha Mills, BoE executive director for financial market infrastructure, said in a recent speech that the limits would “mitigate financial stability risks stemming from large and rapid outflows of deposits from the banking sector — for example sudden drops in the provision of credit to businesses and households — and risks posed by newly recognised systemic payment systems as they are scaling up”.

The global stablecoin market has grown rapidly to reach $288bn. It is dominated by US dollar-based tokens and was given a major boost after Congress passed the Genius Act in July, introducing a regulatory framework that is expected to embed stablecoins as a key part of the financial system. Coinbase has forecast the market could reach $1.2tn by 2028.

“Limits make no sense,” said Riccardo Tordera-Ricchi, director of policy & government relations at The Payments Association. “Just as there are no limits on cash, bank accounts, or e-money, there is no reason beyond scepticism to impose limits on stablecoin ownership. This is a step in the wrong direction.”

Gilles Chemla, a professor at Imperial Business School and co-director of its centre for financial technology, said: “Stablecoins are no longer experimental technologies — they are becoming the foundation of the global digital economy.”

Ahead of a report published on Tuesday, Chemla warned that the UK was falling behind on stablecoin regulation. “London has the talent, the markets, and the history to lead the digital economy, but the delay in implementing a regulatory framework for stablecoins is eroding that advantage,” he said.

Pop Mart shares decline most since April as Labubu shine starts to fade

Hong Kong-listed stock falls 9% in biggest intraday drop since Trump’s ‘liberation day’ tariffs announcement

Pop Mart shares declined by the most since April on Monday as fears mounted that the success of Labubu, its toothy-grinned furry elf doll, was running out of steam.

The Hong Kong-listed shares of the Beijing-based toy company fell nearly 9 per cent in early trading — the biggest intraday drop since just after US President Donald Trump’s “liberation day” tariffs announcement in April — before paring losses to be down about 7 per cent.

The declines took the stock’s losses to more than 10 per cent since last Monday, though it is still up more than 180 per cent year to date.

Pop Mart’s stunning stock market rally has made it one of the world’s most valuable toy companies, with a market capitalisation more than double that of Hasbro and Mattel combined, even after the recent dip.

Much of its success has been due to the global popularity of Labubu, an ugly-but-cute doll that has earned endorsements from celebrities including David Beckham and Rihanna.

But analysts have warned that the success of Labubu risked leaving the company reliant on a possibly transient trend, and say the company needs to continue to release popular new characters to sustain its valuation, now about 29 times one-year forward earnings.

World’s second-largest economy shows signs of strain as Beijing cracks down on industrial overcapacity

China’s retail sales and industrial output growth undershot expectations last month, with both expanding at the slowest rate this year as the economy showed signs of strain from a trade war with the US and domestic weaknesses.

Retail sales rose 3.4 per cent year on year, data from the National Bureau of Statistics showed on Monday, falling short of analysts’ forecasts of 3.9 per cent and July’s 3.7 per cent gain.

Industrial output grew 5.2 per cent last month against a year earlier, slowing from a 5.7 per cent expansion in July. Both figures were the slowest pace of growth since November 2024.

Fixed asset investment growth for the year to date slowed to 0.5 per cent, less than the 1.4 per cent forecast by economists and the 1.6 per cent figure from January to July.

“With officials tightening oversight of industrial overcapacity and the fading tailwind from export frontloading ahead of US tariff hikes on other economies, industrial production growth is set to ease,” Moody’s Analytics said ahead of the data release.

China has relied heavily on trade for the past few years to weather a persistent slowdown in the property market and weaker household demand.

Exporters rushed to ship goods to the US in the first half of the year to pre-empt President Donald Trump’s tariffs. The two sides have agreed a series of reprieves in levies that had reached as high as 145 per cent, the latest in August, to allow for further negotiations.

US Treasury secretary Scott Bessent on Sunday met Chinese vice-premier He Lifeng in Madrid for a fourth round of trade talks, which are expected to continue later on Monday.

But with the threat of higher tariffs weighing on exports to the US, which fell by a third last month, Beijing has turned to domestic demand to help drive economic growth.

Policymakers have unveiled a series of stimulus plans, including childcare subsidies for families and subsidised loans for consumers. The government has also begun cracking down on industrial producer deflation by encouraging consolidation in industries plagued by overcapacity and fierce price competition.

Producer prices, which declined 2.9 per cent year on year in August, have been mired in deflationary territory since October 2022.

Analysts are concerned that measures to address overcapacity — dubbed “involution” in Communist party jargon — could lead to a decline in investment as factories are consolidated.

Other official data released on Monday showed house prices dropped 2.5 per cent year on year against a 2.8 per cent decline in July, while unemployment during the month was 5.3 per cent, compared with 5.2 per cent in July.

Yuhan Zhang, principal economist at The Conference Board’s China Center, said “short-term price movements for key industrial materials, such as cement and steel, also signal continued pressure on China’s real estate sector”.

He added: “Improved macroeconomic conditions and stronger consumer confidence, particularly regarding employment and income, are essential drivers for meaningful price stabilisation.”