The Bank of England has hinted at a potential revision to its proposed limits on the holding of systemically important stablecoins, following criticism from the industry.
Addressing the House of Lords Financial Services Regulation Committee, the BOE Deputy Governor said that while the central bank remains committed to protecting the UK financial system from risks associated with a large-scale shift in deposits into stablecoins, it is also open to exploring alternative approaches. According to published reports, an updated version of the draft regulations on stablecoins is anticipated for June 2026, with final rules expected by year-end.
Proposed limits and industry concerns
In November 2025, the BOE outlined a proposal to impose temporary holding limits of GBP 20,000 per individual and GBP 10 million per business on stablecoins deemed systemically important. The purpose was to mitigate the risk of rapid withdrawal of deposits from banks, which is crucial for UK lending as it constitutes the primary source of household and corporate financing.
Industry responses highlighted challenges in enforcing these caps due to operational complexities, particularly when stablecoins are traded on secondary markets. Tracking individual holdings across multiple wallets can be practically difficult or even unfeasible, leading some industry participants to argue that the regulatory burden would be disproportionate and potentially stifle innovation.
The draft regulations also demand a 40% reserve of backing assets held as unremunerated deposits at the central bank, another point of contention among stakeholders.
Regulatory environment and international comparisons
The BOE’s review overlaps with regulatory developments in other major jurisdictions. The EU has introduced stablecoin rules as part of its digital assets framework, while the passage of the GENIUS Act in the US is driving faster adoption among banks and payments companies.
Acknowledging structural differences between the UK and US financial systems, the BOE has taken a cautious approach. The UK’s reliance on bank deposits for lending contrasts with the greater role played by capital markets in the US, making it more vulnerable to significant deposit migrations into stablecoins.
Stablecoin advocates argue that retaining such caps could place the UK at a competitive disadvantage compared to jurisdictions where regulatory frameworks are already established. While acknowledging these concerns, the BOE insists on some form of safeguard during this transitional period in the financial system’s development.
The central bank is now considering feedback from its November consultation and plans further engagement with industry stakeholders before finalizing the regulatory framework.
