Bank of England considers rollback of stablecoin restrictions in the UK

Bank of England considers potential rollback of stablecoin restrictions in the UK.

The Bank of England is reassessing its proposed stablecoin framework after acknowledging earlier rules may have been too conservative, following sustained pressure from the digital asset industry.

➡️ Why this matters

BoE's initial stablecoin framework tried to strike a balance between financial stability and innovation in GBP stablecoins, with proposals including:

- £20,000 holding cap for individuals

- £10,000,000 holding cap for businesses

- 40% of reserves must be in bank deposits

These measures were designed to limit potential deposit outflows from the banking system. But they also directly constrain the economics of stablecoin issuers, whose business models rely on optimizing yield across reserve assets and scaling supply.

That tension is now coming into focus.

On one side: regulators trying to ensure financial stability.

On the other: stablecoin issuers needing flexibility to compete with offshore alternatives and generate margin.

As Sarah Breeden, Deputy Governor for Financial Stability at the Bank of England, put it: “We are keen to create a regime where stablecoins can succeed… But it is money, and we want to make sure that this new form of money is safe.”

➡️ The bigger picture

The UK’s recalibration stands in contrast to the ECB's stance. ECB President Christine Lagarde has made it increasingly clear that private EUR stablecoins are not viewed as the right path for monetary sovereignty.

This is becoming a defining policy split:

- US is embracing stablecoins to extend USD global dominance and geopolitical reach

- EU is leaning toward safety and sovereignty first approach

- UK is trying to find a balance in the middle

Stablecoin isn't just a payment instrument question for sovereign states; it is increasingly a geopolitical one. Full breakdown of ECB's stablecoin stance.

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