BoE pares back UK stablecoin rules after industry pushback

The Bank of England is revising major elements of its proposed stablecoin rulebook after industry objections, Deputy Governor Sarah Breeden said in an interview. Officials are re-examining individual ownership caps and a requirement that 40% of assets backing a sterling stablecoin be held on deposit at the central bank.

Under the original proposal, individual holdings of sterling-backed stablecoins would have been capped at £20,000 per coin, while corporate holdings would have been limited to £10 million. The same draft required at least 40% of a stablecoin’s reserves to sit on deposit at the Bank of England, earning no interest; the remainder would have been held in sovereign bonds and other liquid assets. Regulators said the rules were designed to limit the risk of rapid outflows from banks as stablecoins grow in use.

Industry groups described the ownership caps as operationally cumbersome and warned that the 40% deposit rule would make UK-based stablecoins less profitable than those operating under U.S. rules. Breeden acknowledged those concerns and said the bank is open to other ways of managing the risks. “We are genuinely open to thinking whether there are other ways of achieving our objective,” she said. She added the 40% figure was derived from recent stress events and the pace of withdrawals seen in past bank runs.

Sterling-based stablecoins currently account for less than 0.5% of a global stablecoin market valued at more than $320 billion. Crypto firms have said strict rules could discourage firms from locating operations in the UK and slow development of the local digital-asset sector.

There is no finalized timetable for the revised framework. Breeden said the Bank of England is willing to alter its approach before any rules take effect and will consider alternative regulatory designs that meet safety goals without imposing unnecessary operational burdens.

Breeden also discussed monetary policy. Markets have priced in two to three U.K. interest-rate increases in 2026, but she indicated there is time to assess shocks and the economy’s path, and that rate moves need not occur in June or July. She noted a lower risk that the conflict in the Middle East will trigger a sustained wage-and-price spiral similar to that seen after Russia’s 2022 invasion of Ukraine, pointing to a softer labor market and restrictive policy settings.

The Bank of England is also reducing a roughly £525 billion bond portfolio. The central bank has estimated that that balance-sheet reduction adds about 0.15 to 0.25 percentage points to long-term interest rates, a figure Breeden described as small.