The Bank of England is reviewing its proposed stablecoin restrictions after criticism from crypto and payments firms. Deputy Governor Sarah Breeden told the Financial Times that the central bank may have been "overly conservative" when drafting rules for systemic sterling stablecoins, and updated proposals are expected before the end of June.
Original framework set holding limits for consumers and businesses
The consultation framework was first published in November. Under that proposal, individuals would be limited to holding £20,000 in stablecoins, while businesses would face a cap of £10 million. The measures were designed to contain systemic risks, but firms argued that temporary holding limits could create operational problems and curb adoption.
Breeden said industry participants had raised concerns about how those restrictions would work in practice. Regulators are now looking at other ways to meet the same policy goals rather than relying on the original limits alone.
Reserve requirement drew scrutiny over profitability
Another major part of the draft required issuers to place at least 40% of reserves at the central bank, with no interest paid on those balances. The rest of the reserves would remain in short-term UK government debt and other liquid assets.
That structure also faced resistance. Breeden acknowledged that firms prefer to hold a greater share of interest-bearing assets because reserve composition has a direct impact on profitability. For issuers, the issue is not only prudential design but also whether the business model remains viable.
Central bank also reviewing near 24/7 settlement plans
At the same time, the Bank of England is reassessing plans for near 24/7 settlement hours to support tokenized financial markets and stablecoin activity. The discussion is not limited to restrictions on issuance and holdings; it also reaches the payment and settlement rails needed for broader use.
Industry groups pushed back soon after the original framework was released. The Payments Association and Innovate Finance argued that the proposals could restrict innovation across the UK payments sector. Tom Duff Gordon, formerly Coinbase's vice president for international policy, had also told lawmakers that holding caps would limit the growth of sterling stablecoins and could stop them from becoming meaningful settlement infrastructure.
Katie Harries, Coinbase's head of policy for Europe, welcomed the latest review. She said ownership caps could turn into barriers to innovation and competitiveness. Stand With Crypto UK also backed softer rules through a petition that, according to reports, gathered more than 85,000 signatures.
UK review lands as stablecoin regulation tightens globally
The rethink comes as stablecoin rules are moving forward in other jurisdictions. In the United States, lawmakers continue to advance legislation, and the GENIUS Act, signed in July, requires full reserve backing and monthly disclosures from issuers.
Bank of England Governor Andrew Bailey recently warned that regulators could run into international disagreements over stablecoin standards as adoption expands worldwide. The UK review now sits within that wider contest over how stablecoins should be supervised and how strict those rules should be.