Bank of England Signals Flexibility on Stablecoin Caps After Industry Pushback

Financial institution of England Deputy Governor Sarah Breeden mentioned the central financial institution is open to revising proposed limits on stablecoin holdings after the plans drew robust criticism from the crypto trade.

Talking to the Home of Lords Monetary Providers Regulation Committee on March 13, Breeden said the Financial institution of England is prepared to think about “constructive alternate options” to the caps outlined in its November 2025 session on regulating systemic sterling-denominated stablecoins.

The draft framework proposed momentary limits of £20,000 (AU$37,900) for particular person customers and £10 million (AU$18.9 million) for companies. The restrictions had been supposed to cut back the danger that enormous flows into stablecoins might pull deposits away from conventional banks. The central financial institution mentioned the caps can be lifted as soon as these dangers decline.

Breeden mentioned the BoE stays open to different approaches that might handle the identical considerations. She added that trade stress to change the proposal has been vital, however mentioned many responses targeted on opposing the boundaries somewhat than presenting different options.

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The session additionally proposed strict reserve guidelines for issuers. Underneath the plan, 40% of the property backing systemic stablecoins would must be held as non-interest-bearing deposits on the Financial institution of England, whereas the remaining 60% might be invested in short-term UK authorities debt. 

Transitional issuers would initially be allowed to carry as much as 95% of reserves in authorities bonds. 

Trade Frustration Over Engagement

The requirement to maintain a big share of reserves in unremunerated central financial institution deposits has been a serious concern for issuers, who argue it might impose vital prices.

The proposed regulatory construction divides oversight between two authorities. The Financial institution of England would supervise prudential and monetary stability dangers for systemic stablecoins, whereas the Monetary Conduct Authority would oversee conduct and shopper safety for non-systemic tokens. Systemic issuers can be topic to joint supervision.

Trade members have additionally raised considerations about how the holding caps might be enforced. Agant chief authorized officer Tom Rhodes mentioned monitoring stablecoin possession throughout secondary markets could also be troublesome and will create a big administrative burden.

Zumo chief government Nick Jones advised regulators undertake time-limited workshops much like the FCA’s “Dash” mannequin to enhance collaboration between policymakers and trade.

Draft guidelines are anticipated in June 2026, with last laws deliberate for the second half of the 12 months. The session course of closed on Feb. 10.

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