The Bank of England is walking back some of its most restrictive stablecoin proposals after Deputy Governor for Financial Stability Sarah Breeden admitted the institution may have been too cautious.
The reassessment comes amid mounting pressure from crypto firms that argue the UK risks falling behind other jurisdictions in digital asset innovation.
Breeden told the Financial Times that the central bank is actively exploring alternatives to ownership caps and reserve requirements that the digital asset industry has called unworkable.
The original proposal
The plan, floated in late 2025, would have capped individual holdings of sterling-denominated stablecoins at £20,000 and business holdings at £10 million.
The central bank also wanted issuers to park at least 40% of their backing assets at the BoE itself, earning zero interest. The remaining reserves could go into sovereign bonds and other liquid instruments.
According to the BOE’s own analysis, the £20,000 threshold would affect roughly 94% of consumers, allowing typical users to hold about 2.1 times their monthly income in stablecoins. On the business side, a £10M limit would severely constrain corporate treasury operations.
Sterling stablecoins under 0.5% but regulators see big potential
The global stablecoin market has reached approximately $318 billion, according to CoinGecko data.
The industry has been largely controlled by dollar-backed stablecoins, especially Tether’s USDT and Circle’s USDC.
Although sterling-based stablecoins account for less than half a percent of the total, regulators see them as potentially beneficial for payments and financial infrastructure.
Standard Chartered projects the stablecoin market could reach $2 trillion by 2028, potentially driving up to $1 trillion in new demand for US Treasury bills alone.
Regulatory competition
The US moved forward with the GENIUS Act, establishing a federal framework that gives stablecoin issuers more operational flexibility. The EU’s Markets in Crypto-Assets Regulation has been live since mid-2024.
Crypto asset companies warned during the BoE’s consultation period, which wrapped up in February 2026, that the proposed rules would push stablecoin activity offshore. The feedback was apparently persuasive enough to prompt a rethink at the highest levels of the central bank.
Breeden acknowledged industry concerns that these measures could make UK stablecoins less competitive and operationally difficult.
The reserve requirement, she noted, was informed by stress scenarios observed during events like the Silicon Valley Bank collapse, though the BoE is reassessing whether those assumptions were too cautious.
