Industry figures have responded to reports that the Bank of England is reconsidering parts of its proposed stablecoin regime following concerns over holding caps and reserve requirements.
Sarah Breeden, the Bank of England’s deputy governor for financial stability, told the Financial Times that the central bank’s initial plans may have been “overly conservative”. The proposals included temporary limits on how much individuals and businesses could hold in systemic stablecoins, alongside a requirement for issuers to hold part of their backing assets in non-interest-bearing accounts at the Bank of England.
Stablecoins are digital tokens designed to maintain a stable value against assets such as sterling or the US dollar. Regulators and financial institutions are increasingly assessing their role in payments, settlement, cross-border transactions and digital capital markets.
The Bank of England launched its consultation on sterling-denominated systemic stablecoins in November 2025. Under the proposals, systemic stablecoin issuers would hold at least 60% of backing assets in short-term UK government debt, with the remaining 40% held in unremunerated accounts at the Bank. The consultation also proposed temporary holding limits of £20,000 for individuals and £10 million for businesses, with exemptions for larger firms where needed.
Firms warn over workability of proposed limits
Industry concerns have focused on whether the proposed caps could be implemented in practice and whether the reserve model would make UK stablecoin issuance commercially difficult.
Derek Corcoran, CEO of Confirmo Limited, an Ireland-based crypto payments and settlements company, said: “The Bank of England’s willingness to revisit both the proposed holding caps and the 40% non-interest-bearing reserve requirement is a positive signal. Frameworks that make stablecoin businesses commercially unworkable don’t protect consumers – they just push activity into less regulated environments and stifle innovation which is the opposite of the intended effect. The broader goal should be bringing stablecoins into the same regulatory frameworks that govern equivalent traditional financial instruments, not creating a separate regime that has no real parallel in conventional payments.
“This underlying tension isn’t unique to the UK. Regulators everywhere are trying to manage financial stability concerns while not working against the payment infrastructure that consumers and businesses actually want to use. Getting that balance right takes time, and it’s encouraging to see the BoE willing to do that work.”
The Bank’s consultation placed the proposed limits within a wider financial stability framework. It argued that holding limits could support a gradual transition as new forms of digital money develop, particularly where widespread stablecoin use could affect bank deposits and credit provision.
UK digital finance ambitions come into focus
The debate sits within the UK’s wider effort to develop a regulatory framework for digital assets while maintaining financial stability.
Commenting on the Bank of England signalling it will revisit elements of the framework, Nick Jones, founder and CEO of digital assets infrastructure platform Zumo, said: “This is very welcome news, and – encouragingly – it shows that UK policymakers are listening closely to the industry and keen to work in tandem.”
“By looking to rethink plans to implement the proposed 40% reserve requirement, as well as strict holding caps, the Bank of England is acknowledging valid industry concerns and seeking to revamp its framework to enable UK issuers to make inroads into the already heavily-dollarised stablecoin market.”
“This mirrors the FCA’s approach to regulating the wider digital assets sector; the regulator is taking the necessary time to consult with the industry, gather input, and then shape a comprehensive regulatory regime that works for all stakeholders. And while some may believe the pace of travel is too slow, there’s an argument to be made that by adopting such a considered approach, the UK will have firmer foundations from which to realise its stated aim of becoming a genuine digital assets hub.”
Thomas Cattee, partner at UK law firm Gherson Solicitors, said: “The Bank of England’s decision to soften aspects of its proposed restrictions on sterling stablecoins is a significant and, in many respects, welcome development for the UK’s digital asset sector. It suggests that regulators are not only focused on financial stability and consumer protection but are also prepared to engage meaningfully with industry concerns where proposed measures risk creating unintended barriers to innovation or market participation.
“Stablecoins are increasingly viewed as a critical piece of digital financial infrastructure, with potential applications across payments, settlement, cross-border transactions and broader institutional adoption of blockchain-based financial services. Against that backdrop, an overly restrictive framework risked placing the UK at a competitive disadvantage compared with jurisdictions such as European Union, Singapore and the United States, all of which continue to develop clearer digital asset frameworks.
“This adjustment should not be interpreted as deregulation. Rather, it reflects a more proportionate and commercially realistic approach to risk. The real test now will be whether the Bank of England, Financial Conduct Authority and HM Treasury can deliver a coordinated and predictable framework. For firms considering whether to establish, invest or expand in the UK, regulatory consistency and legal certainty will be just as important as the substance of the rules themselves.”
Payments use cases shape the debate
Stablecoins remain closely linked to crypto trading, but industry participants argue that their role is expanding into payments, settlement and treasury activity.
Matt Osborne, UK & Europe policy director at blockchain and digital asset infrastructure company Ripple, said: “These comments from the Bank of England are a welcome step forward and shows that the Bank is listening to the market and prioritising its mandate to support the UK’s competitiveness as a global financial centre.
“Regulators need to take stablecoins seriously. They processed $33 trillion in volume last year and are being actively used by blue-chip financial institutions and corporates for cross-border payments, treasury management, collateral and settlement in digital capital markets. The infrastructure is real, the demand is real, and the regulatory framework needs to keep pace.
“Proportionate regulation is what unlocks this potential for the UK. For domestic stablecoins to be able to compete internationally, the Bank of England should drop proposals for individual holding limits, which are operationally unworkable and restrict innovation, and allow issuers to hold government bonds interchangeably with central bank deposits in their liquidity reserves, as is the case for banks today.
“The Bank has an opportunity to get this right. We look forward to working constructively with the Bank and FCA as the framework is finalised.”
The Bank of England’s consultation said non-systemic stablecoin issuers would fall under the Financial Conduct Authority’s regime, while stablecoins recognised as systemic by HM Treasury would transition to the Bank’s regime. Under that model, the Bank would oversee prudential and financial stability risks, while the FCA would supervise conduct and consumer protection.
Calls for proportionate rules
Several industry figures framed the Bank’s reported reassessment as a chance to balance financial stability with practical implementation.
Mark Fairless, group CEO of ClearBank, a cloud-based clearing bank and embedded banking provider, said: “We welcome the Bank of England’s decision to revisit its proposed approach to stablecoin regulation. The Deputy Governor’s comments recognise an important point, that measures such as holding limits are difficult to implement in practice. This review creates a valuable opportunity to develop a proportionate, risk based framework that protects financial stability while supporting innovation and healthy competition. Getting this balance right will be critical to sustaining the UK’s momentum in digital finance.
“Stablecoins have the potential to meaningfully improve the speed and efficiency of payments and to support the next generation of financial services. A clear and workable regulatory framework will help ensure the UK remains an attractive environment for innovation and continues to strengthen its position as a leading global financial centre.”
Carl Grimstad, CEO and co-founder of Lydian, the global crypto and stablecoin payment platform, said: “Regulators have spent years in a defensive crouch when it comes to stablecoins. But the Bank of England’s move to rethink those holding limits is a true reality check. It’s the first real admission we’ve seen that the old closed-loop financial model is effectively dead.
“In truth, the crypto vs banks debate has become a distraction. We’re already living in a multi-ledger world. While traditional institutions are still stuck in the sandbox testing tokenised deposits for back-end efficiency, the $4 trillion digital asset market is out here moving real money on public chains every day. The issue therefore isn’t a clash of ideologies. We have a translation problem.
“Strict limits were always just a band aid for a lack of visibility. Regulators feared volatility because they couldn’t see behind the curtain. By loosening the grip, the UK is finally acknowledging that assets like USDT are the plumbing for global liquidity and, frankly, the most viable rail for the 1.4 billion underbanked people who don’t care about legacy banking. They just need a way to move value.
“Successfully navigating this shift requires infrastructure that offers institutional control without the technical complexity. We’re finally seeing proof that established trust and new-era technology can coexist when the focus remains on standardising how value moves across heterogeneous systems. This regulatory pivot is the necessary signal to stop treating digital assets as a niche experiment and recognise them as the foundational infrastructure they have become. The bottleneck was never the asset. It was the capacity of the rails. Today, in the UK at least, those rails just got a lot wider.”
Final framework still to come
The Bank of England has not finalised its systemic stablecoin regime. Its consultation said it would consider responses before finalising Codes of Practice later in 2026. The Bank and FCA also planned to publish a joint approach document in 2026, setting out how the two regimes would interact.
For fintech firms, issuers and payments companies, attention will now turn to whether the final UK regime can be implemented in practice while still giving regulators enough oversight as stablecoins become more relevant to payments, settlement and institutional digital asset activity.
