CoinDesk
The Bank of England is preparing to soften two of the most contested elements of its draft stablecoin regime after industry pressure highlighted risks to the UK's competitiveness in digital finance, the Financial Times reported Thursday. Deputy governor for financial stability Sarah Breeden told the FT the central bank's earlier plan to cap individual stablecoin holdings at £20,000 (around $27,000) per coin may have been "overly conservative," and that the BOE is "looking very hard at whether there are different ways we can manage what we think is an important risk."
The BOE is also prepared to lower its proposed requirement that at least 40% of stablecoin-backing assets be deposited at the central bank earning zero interest, with the remaining 60% held in short-term UK government debt. Breeden framed the original rule as "cumbersome operationally for a temporary measure," adding the BOE is "genuinely open" to alternatives that still meet its risk objectives.
Why it matters
The proposed framework would have been among the most restrictive in any major market. The 40% unremunerated reserve demand alone forced issuers to absorb a structural yield drag that US-regulated stablecoin issuers do not face, while the per-coin £20,000 ceiling would have capped institutional-scale deployment inside UK rails. Industry groups — including Coinbase's European policy lead Katie Haries — framed the limits as a "cap on innovation" with measurable downside for the UK as a digital-asset hub. Breeden's signal that the BOE is willing to revisit both parameters is the clearest indication yet that the central bank is willing to bend toward market structure rather than hold the conservative line.
Market impact
The recalibration lands as the UK races to keep pace with US and EU stablecoin frameworks, both of which allow issuers broader latitude over reserve composition and have already attracted issuer migration conversations.
Frequently asked questions
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Which Bank of England stablecoin rules are being softened?
The BOE is signaling openness to revising its proposed £20,000 ($27,000) per-coin individual holding cap and its requirement that at least 40% of stablecoin-backing assets be deposited with the central bank earning zero interest.
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Why is the Bank of England reconsidering its stablecoin proposal?
Deputy governor Sarah Breeden told the FT the original rules may have been "overly conservative" and "cumbersome operationally." Industry participants argued the limits would hurt the UK's competitiveness in the digital economy.
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How did the UK crypto industry react to the BOE's signal?
Coinbase's head of policy for Europe, Katie Haries, said the shift is an important signal the BOE is prepared to revisit its proposals, calling a cap on stablecoin holdings "a cap on innovation" with risks for UK competitiveness.
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How would the BOE's reserve rules compare with the US under the original plan?
The proposed mandate that at least 40% of backing assets sit at the BOE earning no interest, with 60% in short-term UK government debt, was more restrictive than equivalent requirements for US-regulated stablecoin issuers.
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What happens next with the UK stablecoin regime?
Watch for the BOE's consultation response and any revised version of its CP25/9 paper. Until concrete thresholds are published, the market is pricing the central bank's directional intent rather than the final rule.
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