On Tuesday, Feb. 24, Coinbase CEO Brian Armstrong expressed concern that if the Bank of England were to adopt its proposed stablecoin caps, it would force liquidity to leave the U.K. His concern comes at a time when Coinbase’s token-based revenue keeps growing.
The caps are part of a Bank of England proposal on systemic stablecoins. The proposed stablecoin caps would establish limits on the amount of stablecoins individuals and businesses can hold and prohibit them from creating reserve yields.
Armstrong made this statement as stablecoins have become the primary source of income for Coinbase, as per its most recent quarterly earnings reports. Industry analysts have stated that these strict regulations could lead to lower institutional investment.
It would also cause capital flight to countries with less restrictive laws and regulations. An example is the U.S., which is about to conclude national laws regarding yield distribution for stablecoin investments.
U.K. Caps on Stablecoins May Force Liquidity Abroad
Armstrong stated that the current U.K. regulatory framework could potentially act as an “innovation barrier.” According to him, investors will lose incentives to hold and create stablecoins.
This is because of the strict regulations, including rigid balance caps and the restrictive non-yielding reserve requirement provisions, by the U.K. government. The British government’s regulatory approach has raised similar concerns among industry groups and British lawmakers.
Industry representatives stated that the regulatory approach may inhibit the adoption of cryptocurrency and blockchain technologies in the U.K. But it would encourage financial institutions and other organizations to establish their operations outside of the U.K.
As a way to promote a pro-innovation regulation for cryptocurrencies and blockchain in the U.K., Coinbase backed an advocacy group called Stand With Crypto UK.
The initiative has collected tens-of-thousands of signatures from supporters of this goal. Additionally, the initiative wants the U.K. government to appoint a designated head of policy development for cryptocurrencies and blockchain technology.
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A Significant Source of Revenue
The exchange reported more than $1.3 billion in stablecoin revenue in 2025. Despite a net loss in quarterly revenue in Q4 2025, the crypto firm earned hundreds of millions of dollars through stablecoins during that time.
USDC, the dollar-pegged stablecoin developed by Circle Internet Group, is a major contributor to Coinbase’s reserve. Coinbase earns interest on the assets used to back the stablecoin.
According to Bloomberg Intelligence, pending legislation in the U.S. (such as the GENIUS Act), will provide Coinbase with opportunities to earn additional revenue from stablecoins. It will enable compliant yield distribution and federal oversight.
COIN Stock Price Increases
Coinbase stock (COIN) closed at $162.03 yesterday after increasing 1.12% in the day’s last trading session. Prior to the day’s opening, COIN stock reached $169.10, gaining 4.36, according to TradingView.
The price movement in COIN stock reflects investor reaction to recent developments. This reflects investor reaction to stablecoin rules, yield policy clarity, and trading volumes.
Source: TradingView
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