- The Bank of England may soften stablecoin holding caps and reserve requirements before final rules.
- Crypto firms argued the original framework could limit innovation and stablecoin adoption in the UK.
- Regulators are reassessing policies as global competition around stablecoin regulation intensifies.
The Bank of England is reconsidering strict stablecoin restrictions after industry criticism over proposed holding caps and reserve requirements. Deputy Governor Sarah Breeden told the Financial Times on Thursday that the central bank may have been “overly conservative” while drafting rules for systemic sterling stablecoins, as regulators prepare updated proposals before the end of June.
Industry Pressure Pushes Policy Review
The Bank of England first introduced the consultation framework in November. Under the proposal, individuals would face a £20,000 stablecoin holding limit, while businesses would face a £10 million cap.
Notably, the draft rules also required issuers to place at least 40% of reserves at the central bank without earning interest. The remaining reserves would stay in short-term UK government debt and other liquid assets.
However, Breeden said industry participants raised operational concerns around the temporary holding restrictions. According to the Financial Times, she said regulators are now exploring alternative ways to achieve the same objectives.
Breeden also acknowledged concerns surrounding reserve requirements. She stated that firms prefer holding more interest-bearing assets because it directly affects profitability.
At the same time, the central bank is reviewing plans for near 24/7 settlement hours to support tokenized financial markets and stablecoin activity.
Crypto Firms Criticize Proposed Framework
Meanwhile, several industry groups criticized the original framework after its release. The Payments Association and Innovate Finance argued the proposals could restrict innovation across the UK payments sector.
Tom Duff Gordon, formerly Coinbase’s vice president for international policy, previously told lawmakers the holding limits would restrict sterling stablecoin growth. He said the caps could prevent stablecoins from becoming meaningful settlement infrastructure.
Katie Harries, Coinbase’s head of policy for Europe, also welcomed the Bank of England’s latest review. She argued that stablecoin ownership caps risk becoming barriers to innovation and competitiveness.
In addition, Stand With Crypto UK organized a petition supporting softer stablecoin rules. According to reports, the petition gathered more than 85,000 signatures.
Global Competition and Stablecoin Debate
The review also comes as U.S. lawmakers continue advancing stablecoin legislation. The GENIUS Act, signed in July, requires full reserve backing and monthly issuer disclosures.
Meanwhile, Bank of England Governor Andrew Bailey recently warned regulators could face international disagreements over stablecoin standards as adoption expands globally.
