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Update May 14, 2:45 pm UTC: This article has been updated to include comments from Katie Haries, head of policy for Europe at Coinbase.
The Bank of England (BoE) 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 Breeden <a href="https://www.ft.com/content/8a17d769-4e8a-4655-8aec-a683e7147322?syn-25a6b1a6=1" rel="noopener noreferrer nofollow">told</a> the Financial Times.
The rethink comes as the UK government and regulators try to <a href="https://www.bankofengland.co.uk/paper/2023/dp/regulatory-regime-for-systemic-payment-systems-using-stablecoins-and-related-service-providers" rel="noopener noreferrer nofollow">position</a> Britain 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 roughly <a href="https://defillama.com/stablecoins" rel="noopener noreferrer nofollow">$300 billion</a> global stablecoin market, which remains dominated by dollar-based issuers.
The BoE set out <a href="https://www.bankofengland.co.uk/paper/2025/cp/proposed-regulatory-regime-for-sterling-denominated-systemic-stablecoins" rel="noopener noreferrer nofollow">detailed</a> ownership limits in its November 2025 consultation paper on a proposed regulatory regime for sterling-denominated systemic stablecoins, building on <a href="https://www.bankofengland.co.uk/paper/2023/dp/regulatory-regime-for-systemic-payment-systems-using-stablecoins-and-related-service-providers" rel="noopener noreferrer nofollow">options</a> first aired in a 2023 discussion paper.
Under that proposal, individuals would be restricted to holding up to 20,000 pounds (roughly $27,000) of a given UK stablecoin, while businesses would be capped at roughly $13.5 million, at least during an initial transition period.<img alt="Bank of England reconsiders strict stablecoin regime" height="887" src="https://s3-images.ctmedia.io/media/content/boe.png" width="1192">
Stablecoins Discussion Paper, 2023. Source: <a href="https://www.bankofengland.co.uk/paper/2023/dp/regulatory-regime-for-systemic-payment-systems-using-stablecoins-and-related-service-providers" rel="noopener noreferrer nofollow">Bank of England</a>
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.
Related: <a href="https://cointelegraph.com/news/boe-governer-global-stablecoin-rules-wrestle-with-us" rel="noopener noreferrer nofollow">Bank of England chief says global stablecoin rules will ‘wrestle’ with US</a>
Industry groups and prospective issuers <a href="https://www.ft.com/content/d80b21d7-2c7b-4727-ace9-4f752c057c7b?syn-25a6b1a6=1" rel="noopener noreferrer nofollow">countered</a> 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.
<h2 id="boe-rethinks-stablecoin-caps-after-pushback">BoE rethinks stablecoin caps after pushback</h2>
Breeden has been one of the most cautious voices on stablecoins within the BoE. In November 2025, she <a href="https://www.reuters.com/sustainability/boards-policy-regulation/bank-englands-breeden-says-diluting-stablecoin-rules-further-could-damage-2025-11-11/" rel="noopener noreferrer nofollow">warned</a> 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.
Law firms and potential issuers <a href="https://" rel="noopener noreferrer nofollow">argue</a> 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.
<h2 id="uk-hunts-for-middle-ground-on-stablecoins">UK hunts for middle ground on stablecoins</h2>
The shift in tone highlights how UK policymakers are still feeling their way toward a middle ground on stablecoins as global approaches diverge.
In January, <a href="https://cointelegraph.com/news/uk-lawmakers-open-stablecoin-regulation-inquiry" rel="noopener noreferrer nofollow">UK lawmakers opened an inquiry</a> into how best to oversee fiat-backed tokens, taking <a href="https://cointelegraph.com/news/uk-lords-grill-coinbase-over-stablecoins" rel="noopener noreferrer nofollow">evidence from industry participants such as Coinbase</a> 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.
Katie Haries, head of policy for Europe at Coinbase, told Cointelegraph it's an important signal the BoE is prepared to revisit its stablecoin proposals.
“We’ve said for a long time that a cap on stablecoin holdings is a cap on innovation,” she said, with “real and significant risks for UK competitiveness.” She added that creating a regime where stablecoins can succeed and benefit users is “exactly the right ambition,” and something the crypto industry and everyday people are asking for.
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.
Magazine: <a href="https://cointelegraph-magazine.com/singapore-crypto-speculation-down-mas-loophole-closure-asia-express/" rel="noopener noreferrer nofollow">Singapore isn’t a ‘crypto hub’ — it’s something better: StraitsX CEO</a>

Bank of England reconsiders strict stablecoin regime

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