UK Eases Crypto Rules: Bank of England Revises Stablecoin Caps for Growth

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Bank of England Relooks Stablecoin Caps as UK Mulls Easing Crypto Rules

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Bank of England revises stablecoin framework after industry feedback in March
Deputy Governor Sarah Breeden signals potential easing of ownership caps in recent comments
Central bank reconsiders reserve requirements to improve stability and profitability

Following feedback from cryptocurrency companies and the financial sector, the Bank of England is planning to revise some aspects of its planned rules for stablecoins. This information comes from Sarah Breeden, a Deputy Governor at the UK central bank.

A recent report in the Financial Times indicates that Breeden stated the central bank is re-evaluating some of its initial plans. This comes after feedback suggested the original proposals were perhaps too cautious.

We want stablecoins to thrive and offer real advantages to people who use them,” said Breeden. “However, because they involve money, we need to ensure this new type of currency is secure and reliable.

Stablecoin ownership caps under review

A major proposal currently being considered involves the Bank of England setting rules for how much of UK stablecoins can be owned.

As a crypto investor, I was following the proposed rules that would have limited how much stablecoin I could hold. They were thinking of capping individual holdings at around £20,000, and businesses at £10 million. From what I understand, the main goal was to stop a huge amount of money leaving traditional banks and flowing into crypto assets instead.

In early March, Sarah Breeden, a deputy governor at the Bank of England, indicated that the bank might ease its planned restrictions on stablecoins after receiving feedback from the cryptocurrency industry.

Breeden did admit that people in the industry were worried the new system would be hard to put into practice.

Industry representatives have told us that our proposed limits would be difficult to put into practice for a short-term solution. Because of this, we’re now looking at other ways to achieve the same goal.

Central Bank eases reserve requirements

The Bank of England is revisiting its plan to mandate that at least 40% of the funds backing stablecoins be held with the central bank, and is considering whether or not to pay interest on those reserves.

As an analyst, I’ve been following the debate around stablecoin regulation, and a key concern raised by crypto firms is that the proposed UK rules could really hurt profitability. They believe UK-issued stablecoins would become significantly less competitive compared to those operating under the more adaptable regulations currently in place in the United States.

Breeden explained the rule stemmed from the financial pressures seen during the 2023 collapse of Silicon Valley Bank and similar situations where banks faced cash flow problems.

She explained the decision was made with the possibility of financial difficulties in mind. However, they will carefully review their assessment to ensure they weren’t too cautious.

Pressure to stay competitive

Experts in the industry are concerned that overly strict rules could discourage innovation and investment in the UK, especially as other countries compete to become leaders in the digital asset space.

Stablecoins pegged to the British pound make up less than half of one percent of the $315 billion global stablecoin market, showing that the UK is significantly behind the U.S., where dollar-based stablecoins are dominant.

Recent statements indicate the Bank of England is trying to encourage new financial technologies while also protecting the established banking sector from potential dangers.

Broader financial stability concerns

In addition to talking about rules for stablecoins, Breeden also addressed ways to strengthen the financial markets overall, specifically mentioning potential changes to how the UK handles short-term loans and government bonds.

As an analyst, I’ve been following the discussions around strengthening financial stability, and I support the ideas being put forward to expand central clearing and add more protections to government bond markets. My view is that investing in these safeguards now – essentially paying a small premium when things are stable – will significantly bolster our financial system and help us weather any future crises much more effectively.

Breeden reassured people that current conflicts in the Middle East are unlikely to cause a big surge in prices like the one that happened after Russia invaded Ukraine in 2022.

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2026-05-14 16:32