The Bank of England is walking back key parts of its stablecoin rulebook after the digital assets industry pushed back hard against proposals officials now admit may have gone too far.
Central Bank Revisits 'Cumbersome' Stablecoin Caps
Deputy Governor Sarah Breeden, who oversees financial stability at the UK central bank, told the Financial Times the BoE is “looking very hard at whether there are different ways we can manage what we think is an important risk as stablecoins come into play.” The bank had proposed capping individual ownership of UK sterling-based stablecoins at 20,000 pounds per coin, with businesses limited to 10 million pounds. Industry groups called those limits operationally “cumbersome.” Breeden acknowledged the criticism directly, stating “We are genuinely open to thinking whether there are other ways of achieving our objective.”
40% Reserve Requirement Under Review
The BoE is also reconsidering a rule requiring at least 40% of assets backing a UK stablecoin to sit on deposit at the central bank, earning no interest. The requirement is far stricter than U.S. rules, making UK-based stablecoins less profitable. Breeden said the 40% figure came from studying withdrawal speeds during the 2023 Silicon Valley Bank collapse. “But we will look hard to see if we have been overly conservative in our thinking there,” she said.
UK Stablecoin Market Share Below 0.5%
Sterling-based stablecoins currently account for less than 0.5% of a global stablecoin market worth over $320 billion, according to FT data. Crypto companies have warned the UK risks losing ground in the race to build a competitive digital assets sector. Breeden disclosed, “We are keen to create a regime where stablecoins can succeed and can deliver benefits to the users. But it is money, and we want to make sure that this new form of money is safe.”
Monetary Policy: No Rush to Hike
On separate monetary policy questions, Breeden pushed back against expectations of near-term rate moves. Markets are pricing in two or three UK rate hikes in 2026, with the first expected as early as summer. Breeden told the FT, “We’ve got time to understand firstly the size of the shocks... we don’t need to do it in June or July.” She also noted limited risk of a wage-price spiral from Middle East conflict, citing a softer labor market and restrictive policy. The BoE’s balance sheet reduction, unwinding a 525 billion pound bond portfolio, was described by Breeden as adding only 0.15 to 0.25 percentage points to long-term rates – “not enormous.” The revised stablecoin framework has no finalized timeline, but Breeden’s comments signal the BoE is prepared to move away from its original approach.