The UK House of Lords Financial Services Regulation Committee is recommending that the Bank of England reconsider its proposed limits on how much stablecoin individual consumers can hold, according to a report published June 2.
The committee’s report, titled “Stablecoins: waiting for regulation,” challenges the central bank’s initial framework, which would cap individual holdings at 20,000 pounds ($27,000) per coin and business holdings at 10 million pounds ($13.5 million). The Bank of England also proposed requiring stablecoin issuers to back 40% of their tokens in unremunerated central bank deposits.
“Rather than pre-emptively impose holding limits, the Bank should consider monitoring the growth of the market and imposing holding limits only if the financial stability risks clearly warrant it,” the Financial Services Regulation Committee stated in its recommendation.
The House of Lords intervention reflects growing tension between regulatory caution and competitive concerns. Industry figures have argued that the restrictions are unnecessarily stern, and some observers warned that such limitations could disadvantage the UK relative to neighboring markets with no comparable stablecoin holding restrictions.
Sarah Breeden, Deputy Governor for Financial Stability at the Bank of England, acknowledged the tension in recent comments. In an interview last month with the Financial Times, Breeden described the Bank’s original proposal as “overly conservative,” signaling internal reconsideration of the framework.
“We’re looking very hard at whether there are different ways we can manage what we think is an important risk as stablecoins come into play,” Breeden said.
The Bank of England is planning to ease the proposed restrictions, However, the central bank has not yet disclosed what alternative approaches it is considering or when it will announce revised requirements.
Stablecoins are digital tokens pegged to the value of traditional financial assets, typically fiat currencies. As adoption of these instruments grows, regulators worldwide are weighing how to manage potential financial stability risks without stifling innovation or market competitiveness.
The House of Lords recommendation suggests that the UK may be moving toward a more market-monitoring approach rather than prescriptive caps, at least for the initial phase of stablecoin regulation. The timing of any formal revision from the Bank of England remains unclear.
