Bank of England Reconsiders Strict Stablecoin Rules After Industry Pushback

The Bank of England is reconsidering parts of its proposed rules for pound-backed stablecoins after digital asset companies warned that strict requirements could hurt adoption and make UK-issued tokens difficult to operate profitably.

Deputy Governor Sarah Breeden said the central bank is reviewing alternatives to temporary limits on how many stablecoins individuals and businesses can hold. Officials are also rethinking a proposal that would require at least 40% of stablecoin reserves to be kept as non-interest-bearing deposits at the Bank of England.

The review comes as UK regulators try to balance financial stability concerns with ambitions to make Britain a competitive digital asset hub.

Proposed Caps Sparked Industry Concerns

Under proposals outlined in late 2025, individuals would be limited to holding up to £20,000 of a specific UK stablecoin, while businesses could face limits of around $13.5 million during an early transition phase.

The BoE argued the restrictions were needed to prevent a sudden movement of deposits from traditional banks into digital money if stablecoins became widely used for payments.

However, industry groups and stablecoin issuers argued the limits would be difficult to monitor and could discourage broader institutional use in areas such as payroll, settlements and treasury management.

UK Searches for Balanced Stablecoin Framework

Sarah Breeden has previously supported strict safeguards, warning that stablecoins function like money and should be as safe as traditional payment systems.

Still, legal experts and crypto firms have argued that heavy reserve requirements would reduce profits and make the UK less competitive than jurisdictions like the United States and European Union.

The latest review suggests UK policymakers are now looking for a middle ground that protects financial stability while giving pound-backed stablecoins a better chance to compete with dollar-pegged rivals in global digital payments.