Bank of England signals openness to revising sterling stablecoin caps amid industry pushback

The Bank of England is open to revising proposed limits on "systemic" sterling stablecoin holdings following pushback from the crypto industry, with a senior official telling lawmakers the central bank is willing to consider alternative approaches to managing financial stability risks.

Speaking before the House of Lords Financial Services Regulation Committee on Wednesday, Deputy Governor Sarah Breeden said the central bank remains "genuinely open to other ways of achieving the objective" of safeguarding the financial system as stablecoins gain traction.

Proposed stablecoin limits

The Bank of England floated the limits last November as part of a consultation on regulating sterling-denominated stablecoins that could become widely used for everyday payments. Under the proposal, individuals would face temporary holding limits of £20,000 ($26,740), while businesses would be capped at £10 million ($13.4 million).

Breeden said the caps were designed to reduce the risk of sudden deposit outflows from banks if consumers shift funds into stablecoins. Unlike the United States, where financial markets play a larger role in lending, the UK economy relies heavily on bank deposits to support loans to households and businesses.

"We proposed holding limits as a way of managing that risk," Breeden told the committee. "We are open to feedback on other ways of achieving it."

The central bank is reviewing responses to the consultation and plans to publish updated draft rules in June, with a final framework expected by the end of the year.

Industry groups and crypto firms have warned that the proposed limits could be difficult to enforce and may discourage innovation in the UK’s digital asset sector. Issuers would also be required to hold at least 40% of reserves backing a stablecoin as non-interest-bearing deposits at the central bank — another element that has drawn criticism.

Tracking compliance could prove challenging because stablecoins are freely transferable on secondary markets, making it difficult for issuers to determine how much any individual ultimately holds.

Tens of thousands of people have raised these concerns to policymakers through public channels, Adriana Ennab, director of Stand With Crypto UK, said.

"Yesterday the Bank of England moved, and that didn't happen by accident," Ennab stated. "It happened because almost 85,000 people signed a petition and founders are putting their businesses on the record urging the UK to act, or miss the opportunity. It’s fantastic that the House of Lords listened to the thousands of voices of Stand With Crypto UK's advocates and that the Bank of England is softening its position, but what we really need is action."

Breeden acknowledged the technical hurdles, noting regulators must weigh whether building systems to enforce temporary caps would justify the cost. "What we've been a bit disappointed with is that nobody has come forward and said, 'why not do it this way?'" she said, adding that much of the feedback so far has focused on opposing the limits rather than proposing alternatives.

European stablecoin adoption

While the debate continues, stablecoins are gaining attention across Europe’s financial sector. Banks and payments firms, including Barclays, are exploring blockchain-based platforms for payments and digital settlement tools, while a consortium of legacy entities aims to launch euro-denominated stablecoins in 2026.

UK policymakers are also exploring how stablecoins could support payments infrastructure. The country’s financial watchdog has indicated stablecoin payment systems will be a regulatory priority in 2026, while digital asset companies, including Coinbase and Kraken, have urged regulators to move quickly on clear frameworks.

Notably, Breeden said it remains unclear how widely stablecoins will ultimately be used in the UK, pointing to open questions around scalability, consumer adoption, and whether tokenized bank deposits might emerge as an alternative model.

Updated to include comments from Stand With Crypto UK Director, Adriana Ennab.