The Bank of England published a consultation paper on Nov. 10 outlining a proposed regulatory framework for stablecoins pegged to the pound sterling.
Under the proposal, individual holders would face temporary limits of £20,000 (around $26,350) per person. Businesses would be capped at £10 million ($13.1 million), with exemptions for entities that require larger balances, including supermarkets and crypto trading platforms.
The bank emphasized that these limits are a precautionary measure, intended to remain only until stablecoins are shown not to threaten the provision of finance to the real economy.
Wholesale transactions through the BoE and the Financial Conduct Authority’s Digital Securities Sandbox would also be exempt.
Asset backing and liquidity requirements
Stablecoin issuers would be required to hold up to 60% of their supporting assets in short-term U.K. government bonds, while the remaining 40% would sit as unremunerated deposits at the Bank of England. This structure aims to ensure robust redemption mechanisms and maintain public confidence.
Additional holdings in interest-earning debt could further demonstrate issuer liquidity and readiness to meet sudden withdrawal demands.
Stablecoins intended for non-systemic purposes, such as cryptocurrency trading, would fall under the supervision of the Financial Conduct Authority rather than the central bank. A joint document from the BoE and FCA detailing the finalized rules is expected by 2026, with public consultation open until February of that year.
Before the latest consultation, crypto firms and industry groups urged the Bank of England to drop proposed caps on stablecoin holdings, warning the UK could fall behind the U.S. and EU in digital finance.
The BoE had considered limits of £10,000–£20,000 ($13,600–$27,200) for individuals and £10 million ($13.6 million) for businesses on systemic stablecoins.
The central bank argued caps would protect financial stability by preventing sudden outflows from banks, ensuring credit provision. Industry leaders called the rules unworkable, citing enforcement challenges and lack of issuer visibility.
Coinbase’s Tom Duff Gordon said caps were:
“bad for UK savers, bad for the City, and bad for sterling,” while others stressed stablecoins should be treated like cash or bank deposits.
Riccardo Tordera‑Ricchi of The Payments Association added:
“Limits make no sense. There are no caps on cash, bank accounts or e‑money, and stablecoins should be treated similarly.”
Critics also highlighted global standards: the U.S. GENIUS Act and EU’s MiCA regulate reserves and governance without ownership limits.
Evolving regulatory stance
Bank of England governor Andrew Bailey has long expressed caution toward stablecoins, warning in July 2025 that unregulated tokens could threaten financial stability and the very nature of money.
“Stablecoins are proposed to have the characteristics of money. They really have to maintain their nominal value,” Bailey said.
Despite this caution, the central bank appears to be softening its position. Deputy Governor for Financial Stability Sarah Breeden framed the proposal as a way to support innovation and foster trust in emerging payment methods. She emphasized that stablecoins could play a meaningful role in the financial system, offering clarity for the industry and a foundation for planning with confidence.
Gunel Ismayilova
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