The Bank of England has signaled that it may step back from its proposed limits on holdings of systemic sterling stablecoins after sustained criticism from the crypto industry. That change in tone suggests the central bank is no longer treating ownership caps as the only workable path to financial stability.
Speaking to the House of Lords Financial Services Regulation Committee, Deputy Governor Sarah Breeden said the Bank was “genuinely open to other ways of achieving the objective” of protecting the financial system from rapid deposit outflows. Her remarks marked a clear softening from the Bank’s earlier position, which had paired strict reserve requirements with explicit caps on how much users could hold.
The Bank is stepping back from its hardest line
The original draft rules had proposed several measures designed to limit concentration in sterling stablecoins. The most controversial elements were the proposed holding caps of £20,000 for individuals and £10 million for businesses, along with a 60:40 reserve split and a rule requiring at least 40% of reserves to sit as non-interest-bearing deposits at the central bank.
Those measures quickly drew opposition from issuers and industry groups, which argued they would be difficult to enforce and could make the UK a less attractive market for stablecoin activity. Much of the criticism focused on the practical and competitive damage that ownership limits could cause rather than on rejecting regulation altogether.
During the committee discussion, the Bank made clear that the consultation process had not produced many concrete alternatives it could assess in detail. Breeden said she had been disappointed by the lack of constructive substitute proposals, even though the central bank now appears willing to revisit its original design.
That reassessment did not happen in isolation. The Bank’s thinking was explicitly measured against approaches in the United States and the European Union, where lawmakers and regulators have moved forward without imposing comparable holding caps on stablecoins.
The pressure now shifts to the next consultation
From a market-structure perspective, the Bank’s openness to dropping ownership caps removes one immediate source of regulatory tail risk for sterling-denominated stablecoin flows. Without a hard ceiling on holdings, the market avoids a direct structural constraint on concentration, even though the broader stability question remains unresolved.
That unresolved issue now becomes the center of the policy debate. If ownership caps are eased or removed, the Bank will still need to show how reserve quality, liquidity tools, or operational safeguards can achieve the same financial-stability objectives without creating excessive compliance burdens.
The next major checkpoint will come in June 2026, when the Bank plans to publish updated draft rules for consultation. That process will determine whether the UK can produce a stablecoin framework that protects resilience without pushing activity into other jurisdictions.
