The Bank of England (BoE) is preparing to release its long-awaited regulatory framework for stablecoins, seeking to align its approach with U.S. authorities while addressing local financial stability concerns. Deputy Governor Sarah Breeden confirmed that the consultation on the new rules will be published on November 10, marking a pivotal moment in the United Kingdom’s digital finance strategy.
Synchronising with U.S. regulators
Speaking at the SALT conference in London, Breeden stressed the need for coordination between British and American regulators.
“I've been talking to the Federal Reserve... The regulators over there and our finance ministries are working together,” she said.
She called it “really important” for the U.S. and Britain to be synchronised on regulation of stablecoins, noting that both jurisdictions are advancing policy at similar speeds.
“Our aim is to make sure that our regime is up and running, just as quickly as the U.S.,” she added, according to Bloomberg.
The BoE’s consultation follows the creation of a joint U.S.-U.K. digital assets task force, launched in September to boost cross-border cooperation on crypto policy and capital markets.
Focus on systemic stablecoins
The upcoming rules will initially apply only to “systemic” stablecoins, those that could become widely used for payments and therefore have potential implications for financial stability. Smaller and less critical digital tokens will fall under a lighter regime managed by the Financial Conduct Authority (FCA).
Stablecoins, which are cryptoassets pegged to a fiat currency or other reserve asset, have come under growing regulatory scrutiny globally as they increasingly serve as payment instruments and settlement tools within digital markets.
The consultation represents a softening from earlier BoE proposals that industry stakeholders viewed as overly restrictive. The rules will clarify how issuers of large-cap stablecoins can operate under official supervision, including oversight standards, reserve composition, and redemption processes.
Caps and safeguards to protect the banking system
According to Reuters and Bloomberg reports, the proposal will include temporary holding caps, up to £20,000 ($26,000) for individuals and £10 million for businesses. These limits are intended as a protective measure rather than a long-term feature of the regime.
Breeden explained that the caps are designed to safeguard the UK’s bank-dependent housing and mortgage markets. In the UK, a substantial portion of household mortgages are funded directly through bank deposits, making the financial system more exposed to sudden liquidity shifts.
“The rationale for more stringent limits in the UK stems from the country's mortgage market being largely bank-based, making it more vulnerable to rapid shifts of deposits into stablecoins,” she told Bloomberg.
By imposing short-term caps, the BoE aims to prevent a scenario where large-scale movements of deposits convert into digital currencies, which could destabilize the traditional banking system.
Balancing innovation and financial stability
The BoE has faced criticism from crypto firms over earlier plans to impose holding limits and conservative language around decentralized finance. Breeden acknowledged those concerns but defended the bank’s stance as an attempt to balance innovation with prudence.
“The regulators over there and our finance ministries are working together,” she said of the U.S. and UK coordination, emphasizing that the goal is not to stifle but to structure growth. Breeden has repeatedly argued that regulation should create a pathway for responsible innovation, ensuring that stablecoins integrated into payment systems remain resilient and trustworthy.
In recent months, the FCA has also taken steps suggesting a more open stance toward digital assets. The regulator lifted its four-year ban on crypto exchange-traded notes (ETNs), expanding access to retail investors, and the government announced the introduction of a “digital markets champion” to lead blockchain adoption in the financial sector.
Keeping pace in global regulation
Globally, the UK’s planned framework mirrors developments in the U.S., the European Union under the Markets in Crypto-Assets Regulation (MiCA), and recent efforts in Asia to formalize stablecoin oversight.
The decisions made during this consultation period could influence the evolution of payment infrastructure, digital asset custody, and tokenized finance in Britain. Officials insist the regime will ensure that the UK stays aligned with global peers and remains a competitive centre for regulated digital finance.
As Breeden summarized, the forthcoming proposals are meant to modernize Britain’s monetary system without compromising stability, a balancing act necessary to maintain confidence as traditional banking and digital money increasingly converge.
Jordan V.
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