CoinDesk
A UK House of Lords committee has urged the Bank of England to reconsider its proposed caps on consumer stablecoin holdings, joining a growing chorus of industry and parliamentary pressure against what lawmakers called pre-emptive restrictions on an early-stage market.
In a report published Wednesday, the cross-party Financial Services Regulation Committee said the BOE should drop its proposed limit of £20,000 ($27,000) per coin for individuals and £10M ($13.5M) for businesses, and instead monitor the market before stepping in. The committee also pushed back on the requirement that stablecoin issuers hold at least 40% of backing assets in unremunerated central bank deposits — a rule it warned could undermine the business viability of UK-based issuers.
Why it matters
The intervention lands at a sensitive moment for the BOE, which is already preparing to soften its stance. Deputy governor for financial stability Sarah Breeden conceded last month that the proposed rules were "overly conservative," telling the Financial Times the Bank is "looking very hard at whether there are different ways we can manage what we think is an important risk as stablecoins come into play." The Lords report gives that pivot political cover, framing the existing proposals as a competitiveness risk that could push GBP stablecoin activity to friendlier jurisdictions.
The committee's preferred path — hold limits only if financial-stability risks clearly warrant them — mirrors the lighter-touch approach already taking shape in the US and the EU's MiCA framework, where reserve and disclosure rules apply but blunt holding caps do not.
Market impact
For UK-anchored stablecoin issuers, the 40% unremunerated reserve rule has been the bigger structural drag than the holding caps — forcing issuers to park nearly half of their backing in zero-yielding BOE deposits would compress margins well below what US dollar stablecoin operators earn on T-bills. Easing or removing that requirement would materially improve the case for issuing a regulated GBP stablecoin onshore rather than routing activity through dollar-denominated alternatives.
Frequently asked questions
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What stablecoin limits did the Bank of England propose?
The BOE proposed a £20,000 ($27,000) per-coin cap on individual stablecoin holdings and a £10M ($13.5M) cap for businesses, plus a requirement that issuers hold at least 40% of backing in unremunerated central bank deposits.
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What did the House of Lords committee recommend instead?
The Financial Services Regulation Committee said the BOE should monitor the GBP stablecoin market and impose holding limits only if financial-stability risks clearly warrant them, and should revisit the 40% unremunerated reserve requirement that could hurt issuer viability.
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Is the Bank of England likely to soften its rules?
Yes — deputy governor for financial stability Sarah Breeden conceded last month the original proposals were "overly conservative," and the Lords report adds political pressure to ease them before final rules are published.
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How does the UK approach compare to the US and EU?
Neither the US framework (under the GENIUS Act) nor the EU's MiCA regime imposes blunt per-holder caps on stablecoins. The Lords committee's recommendation would align the UK more closely with those lighter-touch models.
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Why does the 40% unremunerated reserve rule matter most for issuers?
Forcing issuers to park nearly half of backing in zero-yielding BOE deposits would compress margins well below what US dollar stablecoin operators earn on T-bills, weakening the case for launching a regulated GBP stablecoin onshore.
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