Bank of England May Reconsider Stablecoin Holding Limits After Industry Backlash

The Bank of England has indicated it may revise its proposed limits on stablecoin holdings following criticism from industry groups. The limits, floated between £10,000 and £20,000 ($13,368–$26,733), were designed to prevent a large migration of deposits from banks into stablecoins, which could reduce credit availability for businesses and households.

Speaking before the House of Lords Financial Services Regulation Committee, Deputy Governor Sarah Breeden said the central bank is “genuinely open to other ways of achieving the objective” and is seeking feedback on approaches that manage risks without stifling innovation.

Self-Custody Stablecoins Not Covered by UK Regime

Breeden clarified that stablecoins held in unhosted or self-custody wallets outside regulated entities, such as exchanges, will not fall under the UK’s regulatory framework. This measure addresses concerns over anti-money laundering (AML) and know-your-customer (KYC) compliance.

Sterling Stablecoin Applications Expected in 2026

The Financial Conduct Authority has set up a regulatory sandbox for testing stablecoin products, with applications expected before the end of 2026. Breeden emphasized that the UK aims for stablecoins used as money to be as robust as bank-issued currency, ensuring financial stability while supporting innovation.

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