Bank of England Softens Its Stance on Stablecoins, Yet Dialogue with the Industry Remains Sparse
London – 13 March 2026 – After two years of consultation, the United Kingdom’s central bank is signaling a more permissive outlook on sterling‑denominated stablecoins. Deputy Governor Sarah Breeden told the House of Lords Financial Services Regulation Committee that the Bank of England (BoE) is willing to revisit the limits it proposed for stablecoin holdings, but she also lamented the lack of constructive proposals from market participants.
A brief recap of the regulatory journey
- November 2025: The BoE released a paper outlining a prospective regulatory framework for “systemic” stablecoins, building on an earlier 2023 discussion that claimed to have gathered input from banks, payment‑service providers, academia and other stakeholders.
- Key proposals: The draft set a £20,000 cap on stablecoin balances for individuals and a £10 million ceiling for businesses that accept the token as payment. It also required issuers to keep 40 % of their reserves in non‑interest‑bearing deposits at the BoE, with the remaining 60 % in high‑quality, short‑term UK government debt.
- Industry reaction: Crypto firms argued that the caps would stifle innovation and that the capital‑style safeguards were excessive for fully‑backed issuers. Tom Rhodes, chief legal officer of Agant, described the BoE’s approach at the time as “disproportionately cautious”.
What has changed?
During her appearance before the Lords committee, Breeden confirmed that the BoE is “open to feedback on other ways of achieving” the same risk‑mitigation goals. She explained that the original limits were intended to curb a rapid migration of deposits from traditional banks to stablecoins—a scenario that could, in theory, destabilise the banking system.
“We proposed holding limits as a way of managing that risk. We are open to feedback on other ways of achieving it,” Breeden said.
However, the deputy governor also highlighted that the regulator has yet to receive concrete alternative solutions from the sector. “What we’ve heard is ‘don’t do it’ and ‘we understand why you want to do it,’ rather than proposals that fill the gap,” she added.
Industry representatives dispute the notion that dialogue has been lacking. Rhodes pointed out that his firm and several trade associations have submitted extensive written comments and taken part in round‑table meetings over the past two years. “It’s not possible to provide concrete data in the circumstances, which is why lighter‑touch, principles‑based regimes are appropriate at this nascent stage,” he argued.
The “multi‑moneyverse” vision
Breeden reiterated the BoE’s longer‑term ambition of a “multi‑moneyverse” – a payments ecosystem where tokenised money issued by non‑banks can coexist with traditional fiat. In a September 2025 keynote, she described this as a market characterised by choice, competition and technology‑driven efficiency, all underpinned by confidence in the monetary unit.
Nick Jones, founder and CEO of digital‑asset platform Zumo, welcomed the shift, noting that the BoE’s scepticism toward digital assets appears to be waning. He believes that different forms of money will find distinct niches: “Large institutional capital may gravitate toward tokenised deposits, while smaller retail‑payment firms can leverage the network effects of stablecoins.”
Remaining friction points
Despite the softened rhetoric, several policy details are still contested:
| Issue | BoE Position | Industry Push |
|---|---|---|
| Holding caps | £20k per person, £10 m per business (proposed) | Removal of caps to avoid restricting user adoption |
| Reserve composition | 40 % in BOE non‑remunerated deposits, up to 60 % in short‑term UK gilts | Allow partial remuneration of the 40 % to improve commercial viability |
| Capital‑style safeguards | Bank‑like capital requirements for issuers | Focus on reserve quality and transparency instead of equity buffers |
The regulator’s reserve rule draws on the fallout from the 2023 Silicon Valley Bank collapse, which temporarily broke the peg of the USDC stablecoin. Breeden defended the 40 % requirement as “broadly in line” with lessons from that event.
Outlook and timeline
The BoE has indicated that a final set of rules will be published in the second half of 2026, though the draft may still be amended in response to stakeholder input. The industry continues to lobby for lighter‑touch supervision, arguing that a proportionate regime could position the UK as a global leader in stablecoin innovation.
Key takeaways
- Regulatory tone is shifting: The BoE is showing willingness to adjust its initial stablecoin caps and is open to alternative risk‑mitigation measures.
- Dialogue remains superficial: While the regulator complains of limited constructive feedback, industry groups claim they have supplied extensive written commentary and participated in meetings.
- Core requirements persist: The 40 % BOE‑deposit reserve rule and the overall capital‑style framework are still on the table, with the industry seeking more flexibility.
- Final rules expected later in 2026: Stakeholders have a limited window to influence the definitive regulatory package.
- Strategic implication: A more balanced regime could enable a “multi‑moneyverse” in the UK, allowing pound‑backed stablecoins to operate alongside traditional bank money and potentially give the country a competitive edge in the global digital‑asset landscape.
The article reflects information available up to 13 March 2026 and incorporates statements made by BoE officials and industry representatives. It does not constitute financial, legal, or investment advice.
Source: https://cointelegraph.com/news/uk-central-bank-stablecoin-industry-input-lacking?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
