The Bank of England is reviewing proposed caps and reserve rules for sterling stablecoins after industry pushback, a shift that could shape the UK’s role in global digital assets.
BoE weighs easing UK stablecoin caps and reserve demands after industry backlash, in a move that could decide whether GBP tokens can compete with dollar‑pegged rivals.
The Bank of England is reconsidering parts of its proposed regime for pound sterling stablecoins after digital asset companies warned that holding caps and reserve requirements could stifle adoption and make UK-issued tokens uneconomic. The central bank is looking at alternatives to temporary caps on how many stablecoins individuals and businesses can hold, and is examining whether its requirement that at least 40% of backing assets be held as non-interest-bearing deposits at the BoE is overly conservative, Deputy Governor Sarah BreedenBritain as a competitive hub for digital assets while containing risks to bank funding and financial stability.
Sterling-pegged tokens currently make up a tiny fraction of the roughlyUnder that proposal, individuals would be restricted to holding up to 20,000 pounds of a given UK stablecoin, while businesses would be capped at roughly $13.5 million, at least during an initial transition period.
The central bank argued that limits were needed to avoid a sudden outflow of deposits from commercial banks into new forms of “tokenised” money if a large stablecoin were rapidly adopted for payments.that the caps were operationally cumbersome, hard to supervise across platforms, and could deter serious institutional use of regulated UK stablecoins in areas like corporate treasury, payroll and settlement.that diluting the rules too far could damage financial stability, stressing that stablecoins are money-like instruments that must be at least as safe and robust as existing payments infrastructure.
At the time, she backed stringent liquidity requirements that would force stablecoin issuers to park large portions of their reserves at the central bank and hold the rest in high-quality liquid securities such as UK government bonds.that such a structure would significantly compress margins and make UK stablecoin issuance far less attractive than operating under the United States or European Union regimes. The shift in tone highlights how UK policymakers are still feeling their way toward a middle ground on stablecoins as global approaches diverge.and Innovate Finance, while the BoE and Treasury continue to refine a framework intended to sit alongside broader crypto rules and potential digital pound plans.
A more flexible approach to caps and backing requirements could determine whether systemic GBP stablecoins emerge as serious competitors to dollar-pegged rivals in cross-border payments and onshore crypto markets, or whether activity remains concentrated in jurisdictions seen as more accommodating. Zoltan Vardai
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