Bank of England Signals Flexibility on Stablecoin Caps After Industry Pushback

Bank of England Deputy Governor Sarah Breeden said the central bank is open to revising proposed limits on stablecoin holdings after the plans drew strong criticism from the crypto industry.

Speaking to the House of Lords Financial Services Regulation Committee on March 13, Breeden said the Bank of England is willing to consider “constructive alternatives” to the caps outlined in its November 2025 consultation on regulating systemic sterling-denominated stablecoins.

The draft framework proposed temporary limits of £20,000 (AU$37,900) for individual users and £10 million (AU$18.9 million) for businesses. The restrictions were intended to reduce the risk that large flows into stablecoins could pull deposits away from traditional banks. The central bank said the caps would be lifted once those risks decline.

Breeden said the BoE remains open to other approaches that could address the same concerns. She added that industry pressure to modify the proposal has been significant, but said many responses focused on opposing the limits rather than presenting alternative solutions.

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The consultation also proposed strict reserve rules for issuers. Under the plan, 40% of the assets backing systemic stablecoins would need to be held as non-interest-bearing deposits at the Bank of England, while the remaining 60% could be invested in short-term UK government debt. 

Transitional issuers would initially be allowed to hold up to 95% of reserves in government bonds. 

Industry Frustration Over Engagement

The requirement to keep a large share of reserves in unremunerated central bank deposits has been a major concern for issuers, who argue it could impose significant costs.

The proposed regulatory structure divides oversight between two authorities. The Bank of England would supervise prudential and financial stability risks for systemic stablecoins, while the Financial Conduct Authority would oversee conduct and consumer protection for non-systemic tokens. Systemic issuers would be subject to joint supervision.

Industry participants have also raised concerns about how the holding caps could be enforced. Agant chief legal officer Tom Rhodes said tracking stablecoin ownership across secondary markets may be difficult and could create a large administrative burden.

Zumo chief executive Nick Jones suggested regulators adopt time-limited workshops similar to the FCA’s “Sprint” model to improve collaboration between policymakers and industry.

Draft rules are expected in June 2026, with final regulations planned for the second half of the year. The consultation process closed on Feb. 10.

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