The Bank of England is preparing to ease its proposed stablecoin regulations, including ownership caps and reserve requirements the central bank now acknowledges as “overly conservative.” Sarah Breeden, BoE Deputy Governor for Financial Stability, revealed in a Financial Times interview that the bank is “looking very hard” at alternative implementation approaches following sustained pressure from UK crypto industry groups and parliamentary lawmakers who warned the rules would handicap Britain’s digital assets sector relative to the US and EU.
Why the BoE Is Reconsidering Its Approach
In November, the BoE proposed stablecoin ownership caps of £10,000 to £20,000 per individual and £10 million per business, alongside a 40% minimum unremunerated central bank deposit requirement for systemic issuers. The framework was designed to mitigate financial stability risks from rapid deposit outflows, drawing lessons from the 2023 Silicon Valley Bank collapse. However, the UK Cryptoasset Business Council and a December coalition of House of Lords lawmakers argued the caps were impractical and would undermine the government’s positioning as a digital assets leader. Simon Jennings, Executive Director of the Cryptoasset Business Council, noted that the proposed limits “simply don’t work in practice” and would require “costly, complex new systems, such as digital IDs or constant co-ordination between wallets.”
BoE Acknowledges Operational Friction
Breeden’s shift signals genuine regulatory recalibration rather than symbolic retreat. She stated that “what we have heard from industry is that the way we have proposed to implement limits is cumbersome operationally,” acknowledging practical implementation barriers the central bank had not initially prioritized. The BoE is now actively exploring alternative solutions to achieve its financial stability goals without the operational burden of direct ownership limits. This follows a March House of Lords meeting where Breeden first signaled openness to reviewing the proposals. The crypto market capitalization stood at $2.64 trillion as of the article date, underscoring the sector’s scale and the stakes of regulatory design.
Implications for UK Crypto Regulation
The BoE’s willingness to ease rules reflects broader tension between financial stability mandates and competitive positioning in digital assets. Breeden emphasized the central bank’s core concern: “But it is money and we want to make sure that this new form of money is safe.” This framing suggests the BoE will pursue alternative safeguards rather than abandon oversight entirely. The revised approach could position the UK as more pragmatic than the EU’s stricter MiCA framework while maintaining prudential standards—a competitive advantage if execution succeeds. However, no specific timeline for revised rules has been announced, leaving industry and investors in uncertainty about when clarified requirements will take effect.
What Comes Next
The BoE has not disclosed which alternative mechanisms it is evaluating or when revised proposals will be published. Industry groups will likely push for further consultation once new frameworks emerge. The central bank’s openness to recalibration suggests the ownership cap model has been abandoned, but the 40% unremunerated deposit requirement and 60:40 asset allocation ratios remain under review. Confirmation of revised rules will be critical for UK stablecoin issuers planning product launches and compliance infrastructure.
