The Bank of England (BoE) is reconsidering its proposed stablecoin framework after strong pushback from crypto firms warning the rules could stifle innovation and drive activity overseas.
Deputy Governor Sarah Breeden said the central bank is now exploring softer alternatives to earlier restrictions on holdings and reserve requirements, signaling a potential shift in the UK’s digital asset strategy.
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The reassessment comes as global regulators race to define stablecoin standards, raising pressure on London to avoid falling behind the US and European Union.
Reversal of Proposed Framework
The original proposal, introduced in late 2025, would have capped stablecoin holdings at £20,000 for individuals and £10 million for businesses.
Issuers of systemic stablecoins were also expected to hold around 40% of reserves in non-interest-bearing accounts at the Bank of England, with the remainder placed in UK government bonds.
Breeden told the Financial Times the measures are now under review, with officials considering less prescriptive alternatives. The central bank is also reassessing whether its stress assumptions were overly conservative.
Industry Pressure and Global Race
Crypto firms and fintech companies argued the proposed framework would have made UK stablecoins commercially unviable and reduced their use in payments infrastructure.
Consultation feedback, which closed in February 2026, warned the rules risked pushing development offshore.
At the same time, regulatory competition has intensified. The United States advanced its stablecoin framework through the GENIUS Act, while the European Union’s MiCA regime has already been in effect since 2024, giving issuers clearer operating rules.
Shift Toward Flexibility
Breeden said the Bank of England is now considering a more flexible model that reduces reliance on strict caps and allows broader use of UK government bonds in reserve portfolios.
The regulator is also weighing a “less prescriptive” approach aimed at balancing financial stability with competitiveness in digital payments.
Sterling-backed stablecoins still account for less than 0.5% of the global $318 billion market, but policymakers see potential long-term use in payments and settlement systems.
Why This Matters
The revision of the Bank of England stablecoin rules signals a broader regulatory pivot as jurisdictions compete to define global crypto standards. The outcome will likely influence whether the UK becomes a competitive hub for stablecoin innovation or loses ground to the US and EU.
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People Also Ask:
The Bank of England is the UK’s central bank, responsible for monetary policy, financial stability, and issuing the British pound.
Yes, it is currently reviewing earlier proposals and considering more flexible rules in response to industry feedback and global competition.
They are proposed regulatory guidelines covering stablecoin holding limits, reserve requirements, and systemic risk controls for issuers operating in the UK.
