The Bank of England is reexamining elements of its proposed regime for sterling-denominated stablecoins after digital-asset firms warned that holding caps and reserve requirements could hinder adoption and render UK-issued tokens uneconomical. According to Cointelegraph, Deputy Governor Sarah Breeden signaled that the rule mandating at least 40% of backing assets be held as non-interest-bearing deposits at the BoE may be overly conservative, a view she discussed with the Financial Times.
The rethink comes as the UK government and regulators strive to position Britain as a competitive hub for digital assets while safeguarding bank funding and financial stability. Sterling-pegged tokens currently represent a tiny portion of the roughly $300 billion global stablecoin market, a market still dominated by dollar-based issuers. Source: DeFi Llama.
The BoE laid out detailed ownership limits in its November 2025 consultation paper on a proposed regulatory regime for sterling-denominated systemic stablecoins, building on options first aired in a 2023 discussion paper. Under the proposal, individuals would be limited to holding up to ยฃ20,000 (roughly $27,000) of a given UK stablecoin, while businesses would face a cap of about $13.5 million, at least during a transition period.
The central bank argued that caps were necessary to prevent a sudden outflow of deposits from commercial banks into tokenised money if a large stablecoin were rapidly adopted for payments. Industry groups and potential issuers countered that such caps would be operationally cumbersome, difficult to supervise across platforms, and could deter serious institutional use of regulated UK stablecoins in corporate treasury, payroll, and settlement activities.
BoE rethinks stablecoin caps after pushback
Breeden has long been among the BoEโs most cautious voices on stablecoins. In November 2025 she warned that diluting the rules too far could undermine financial stability, emphasizing that stablecoins are money-like instruments that must be as safe and robust as existing payments infrastructure. At the time, she supported stringent liquidity requirements that would require issuers to place a substantial portion of reserves at the central bank and hold the remainder in highโquality liquid securities such as UK government bonds. Legal firms and prospective issuers argue that such a framework could compress margins and tilt competitiveness away from the UK compared with the United States or the European Union.
UK hunts for middle ground on stablecoins
The evolving stance reflects policymakersโ ongoing effort to find a middle ground as global regulatory approaches diverge. In January, UK lawmakers opened an inquiry into how fiat-backed tokens should be overseen, hearing evidence from industry participants such as Coinbase and Innovate Finance, while the BoE and the 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 cross-border payment tools and onโshore crypto market participants or whether activity remains concentrated in jurisdictions perceived as more accommodating. As authorities balance stability with competitiveness, the policy trajectory will shape the UKโs role in the evolving global stablecoin landscape.
Closing perspective: the path forward remains contingent on regulatory alignment and practical adaptation by issuers and banks, with ongoing scrutiny from policymakers and industry participants alike.
