Deputy Governor Sarah Breeden Defends Strict Regulatory Framework Amid Industry Pushback
The Bank of England (BOE) has reaffirmed its tough stance on stablecoin regulation, warning that any dilution of proposed rules could undermine financial stability and heighten systemic risk. Deputy Governor Sarah Breeden said on Tuesday that the UK must carefully manage the transition to this “new form of money” as the country moves toward integrating stablecoins into its financial system.
BOE Defends Tight Limits on Stablecoin Holdings
In remarks to Reuters, Breeden said, “We have a different set of risks to manage as we transition to bringing in this new form of money.” She emphasized that weaker regulation could amplify pressure on traditional banks by encouraging large-scale movement of deposits into stablecoins.
The BOE’s latest consultation paper, released Monday, maintains limits on stablecoin holdings — £10,000 ($26,300) for individuals and £10 million ($13.1 million) for most companies. The proposal, which the crypto industry has criticized as overly restrictive, is designed to “halve the stress” on banks and credit creation stemming from potential deposit withdrawals.
Industry Criticism and Regulatory Context
Stablecoins have surged into a $312 billion global market in 2025, and the UK is seeking to align with U.S. regulatory momentum following President Donald Trump’s GENIUS Act, which set a framework for stablecoin oversight. However, UK-based crypto firms argue that the BOE’s limits could stifle innovation and institutional participation.
Despite the criticism, Breeden insisted the measures are prudent. “The events around Circle’s USDC depeg demonstrated why strong backing requirements are essential,” she said, referencing the March 2023 Silicon Valley Bank collapse, which temporarily disrupted USDC’s peg.
40% Backing Requirement and Coordination Efforts
The BOE has also proposed that stablecoin issuers must hold 40% of their reserves directly with the central bank, earning no interest — a safeguard meant to protect consumers and ensure liquidity during stress events.
The UK’s approach is being coordinated with the Financial Conduct Authority (FCA), which will oversee stablecoins used in crypto trading, while the BOE will regulate those used for day-to-day payments.
“Stablecoins could play a vital role in the future of payments,” Breeden said, “but only if they are built on robust foundations that protect both users and the financial system.”
The BOE plans to finalize its stablecoin framework in 2026, marking a pivotal moment for Britain’s digital asset policy as it seeks to balance innovation with financial stability.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.