The Bank of England is weighing alternatives to existing holding limits on stablecoins and will release draft rules next month. It is also hoped that the rules will be finalized by the end of the year, in line with the broader U.S. timeline for crypto legislation. The BoE is also carefully considering feedback to a November consultation on transitional limits for individuals’ and businesses’ holdings of systemic stablecoins. That consultation made clear that the bank was open to other mechanisms to achieve the same objective.
What’s noteworthy about the BoE’s announcement is that it reflects a marked change in tone. Usually when regulators and incumbents voice their opinions on the crypto market, it’s because they’re pushing for further crackdowns and regulation. What’s different this time is that there’s an apparent willingness to talk less about blunt caps and arduous rules and more about alternative guardrails of the sort that don’t stifle market growth. The risk objective remains the same, and the BoE still worries about potential threats to credit provision and rapid migration from bank deposits into stablecoins, albeit with a more conciliatory tone.
There’s also a competitive element to the market. Under President Donald Trump, the US has been quick to embrace cryptocurrencies, forcing European markets to test whether their own plans can remain competitive. The UK wants to avoid a scenario where it has a stablecoin rulebook that looks safe in theory but is commercially irrelevant in practice.
Reaction from the UK’s crypto industry has, unsurprisingly, been largely positive. The UK Cryptoasset Business Council welcomed the move towards interventions tied to supervisory data and metrics rather than preset limits. Furthermore, Coinbase UK suggested issuance caps may be more workable than holding caps. These comments suggest the industry sees a real chance for the rules to become more commercially viable.
By contrast, earlier proposals included temporary ownership limits of £20,000 for individuals and £10 million for businesses, along with a requirement that at least 40% of reserves had to be held as non-interest-bearing deposits at the central bank. For any issuer hoping to make stablecoins commercially viable, that’s an extremely heavy operating model.
While no one’s expecting a major boom overnight, the development does put the UK closer in line with US strategies and improves the odds that it too ends up with a regime that serious players can actually build and compete under. All of this matters for issuance, custody, wallet distribution, treasury products, remittance flows, and tokenized-settlement use cases, and it also gives other jurisdictions a live case study in just how difficult it is to balance deposit stability with innovation.