The Bank of England's newly published consultation paper on sterling-denominated systemic stablecoins has drawn sharp criticism from industry leaders who say the UK regulator is moving too slowly, even as they acknowledge some proposals make sense.
The Bank of England on Monday released a comprehensive regulatory framework for systemic stablecoins, marking what officials call "a pivotal step" toward integrating digital money into the UK payments system.
The regime proposes allowing stablecoin issuers to hold up to 60% of backing assets in short-term UK government debt, with the remaining 40% in unremunerated Bank of England accounts.
The framework also sets temporary holding limits of £20,000 for individuals and £10 million for businesses, with an exemptions regime for larger enterprises.
However, the timing of the consultation, which remains open until February 2026 before final codes are implemented later that year, has become a flashpoint for criticism.
Speaking with Yellow.com, Tim Meggs, Co-Founder and CEO of digital asset trading firm LO: TECH, said the proposals themselves are reasonable but arrive far too late.
"The issue isn't with how sensible or not these consultation proposals are; it's with the fact that the regulator is so far behind," Meggs said. "In a world where the US put stablecoin legislation in place earlier this year, this stuff should be going into legislation now in the UK, not just consultation."
The £10 million business holding limit has emerged as another contentious point.
Arnoud Star Busmann, CEO at MiCA-regulated stablecoin issuer Quantoz, warned the cap would hamper adoption by large corporations.
"While the Bank of England's consultation is an important step towards stablecoin regulation, the proposed £10 million cap per business will make it difficult for large corporates to use stablecoins efficiently for treasury or capital management," Star Busmann said, adding that the UK risks creating an environment where stablecoins remain underused despite strong market demand.
The £20,000 individual limit has already generated widespread mockery online, with Meggs noting that "scare headlines around 20,000 GBP stablecoins limits have already begun to trigger a bunch of scorn and memes on the internet."
Not all reactions have been negative.
Lane Rettig, Head of Research at NEAR Foundation, expressed cautious optimism about the framework.
He noted the distinction between systemic and non-systemic stablecoins "is particularly interesting and could become a key model for how regulators differentiate between projects with varying levels of risk and market influence."
Rebecca Liao, CEO and Co-Founder of Saga, offered the most enthusiastic assessment, calling the framework landmark regulatory clarity.
"The Bank of England's proposed framework for sterling-denominated systemic stablecoins provides the landmark regulatory clarity that transforms these assets from a crypto-native trading tool to a rapidly accepted financial utility," Liao said.
She emphasized that granting systemic issuers access to Bank of England deposit accounts provides "the legal certainty and institutional trust required for a massive surge in both transaction volume and institutional adoption."
Nicholas Roberts-Huntley, CEO and co-founder of Blueprint Finance, said the regime formally legitimizes stablecoins for mainstream use.
The framework sets clear requirements for issuance, risk management, and oversight, he noted, enabling financial institutions to confidently develop stablecoin-based products that meet safety and reliability standards.
The Bank's proposals aim to safeguard continued access to credit as the financial system adapts to new forms of digital money.
Deputy Governor for Financial Stability Sarah Breeden said the Bank had "listened carefully to feedback" in shaping the proposals, which are designed to support innovation while building trust in emerging money forms.
The regime will not cover stablecoins used for non-systemic purposes such as cryptoasset trading, which will remain under Financial Conduct Authority supervision. Systemic issuers will be jointly regulated by both the Bank of England and FCA, with a joint approach document planned for 2026.