The Bank of England (BoE) signaled it is prepared to revisit key elements of its proposed stablecoin regulatory framework — including controversial ownership caps and reserve-backing requirements — after sustained criticism from UK lawmakers, industry executives and crypto advocacy groups.
What Happened: BoE Softens Stance
BoE Deputy Governor Sarah Breeden told the House of Lords Financial Services Regulation Committee on Wednesday that the central bank was "genuinely open" to revising proposals it published for public consultation in late 2025.
The contested rules would cap individual stablecoin holdings at £10,000 to £20,000 and business holdings at £10 million, while requiring systemic issuers to park at least 40% of their reserves as unremunerated deposits at the central bank.
Breeden acknowledged the technical difficulties of enforcing such caps but maintained they "are there to support an orderly transition as the shape of the system changes." She also said the BoE would review whether its proposed 60:40 asset-backing split is "excessively conservative," though she argued the structure broadly mirrors frameworks proposed in the United States and already adopted in the European Union.
The concession followed a letter from a coalition of UK lawmakers to Chancellor Rachel Reeves, warning that the caps could drive innovation offshore, push investors toward USD-pegged alternatives and leave the UK "as a global outlier." Breeden confirmed the central bank would release draft rules for public consultation in June, with final regulations expected by year-end.
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Why It Matters: UK Competitiveness Risk
Benoit Marzouk, CEO of Tokenised GBP — the issuer of one of the few pound-pegged stablecoins currently available — told Bloomberg there is a "really small" window to get the policy right, adding that the £10 million business cap is effectively unworkable. Tom Rhodes, CLO at Agant, a company planning to issue a pound-denominated stablecoin, said tracking token holders would impose "a massive administrative burden" on issuers.
UK crypto industry groups had already called the cap proposal a "step in the wrong direction" and urged the BoE to abandon it. Breeden conceded the pressure from industry is "very real," but said the central bank has not yet received "the constructive engagement on a different way to solve the problem that I might have hoped for."
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