Report: BoE Deputy Governor Breeden Signals Retreat on UK Stablecoin Ownership Limits

The Bank of England is revising its rules for stablecoins after receiving strong criticism from the digital asset industry. Officials now acknowledge that some of their initial proposals were overly strict.

Key Takeaways:
Bank of England Deputy Governor Sarah Breeden told the Financial Times (FT) its stablecoin ownership limits may have been “overly conservative.”
The BoE plans to lower its 40% central bank deposit requirement, which is stricter than U.S. rules, hurting UK stablecoin profitability.
Breeden signaled the BoE sees no urgency to raise rates in June or July 2026, despite markets pricing in 2 to 3 hikes this year.

Bank of England Revisits Stablecoin Limits That Industry Called ‘Cumbersome’

Deputy Governor Sarah Breeden, who oversees financial stability at the UK central bank, told the Financial Times (FT) the BoE is “looking very hard at whether there are different ways we can manage what we think is an important risk as stablecoins come into play.” FT journalists Martin Arnold and Sam Fleming reported on the matter.

Stablecoins are digital tokens pegged one-to-one to a fiat currency such as the U.S. dollar. The BoE had proposed capping individual ownership of UK sterling-based stablecoins at 20,000 pounds per coin, with businesses limited to 10 million pounds, as a guardrail against large deposit outflows from banks.

The report highlighted that industry groups found the restrictions difficult to work with. Ms. Breeden directly addressed this concern, stating, “We’re truly willing to consider if there are alternative approaches to reach our goals,” as she told the Financial Times.

The BoE is also reconsidering a separate rule requiring at least 40% of assets backing a UK stablecoin to sit on deposit at the central bank, earning no interest. The remainder would be held in sovereign bonds and other liquid assets. The FT editorial noted that the requirement is far stricter than rules in the United States, making UK-based stablecoins less profitable to operate.

Breeden said the 40% figure came from studying the pace of withdrawals during the 2023 Silicon Valley Bank collapse and other recent stress events. “It was based on experience of potential liquidity stress,” she explained. “But we will look hard to see if we have been overly conservative in our thinking there.”

Sterling-based stablecoins currently account for less than 0.5% of a global stablecoin market worth over $320 billion, according to the FT report’s stats. Crypto companies have warned that the UK risks losing ground in the race to build a competitive digital assets sector.

Breeden disclosed to the FT reporters that the central bank wants UK stablecoins to work. “We are keen to create a regime where stablecoins can succeed and can deliver benefits to the users,” she said. “But it is money, and we want to make sure that this new form of money is safe.”

Regarding future interest rate changes, Breeden indicated the Bank of England isn’t likely to make any moves soon. Although markets predict two or three rate hikes in the UK during 2026, potentially starting next summer, Breeden clarified that there’s no firm commitment to that schedule.

We have time to assess both the extent of the economic challenges and how the economy is changing. While it’s true we can’t delay indefinitely, there’s no need to make a decision in June or July.

Breeden also noted in the interview that she sees limited risk that the conflict in the Middle East will produce the kind of sustained wage and price spiral seen after Russia’s invasion of Ukraine in 2022. She cited a softer labor market and restrictive monetary policy as factors reducing that risk.

The Bank of England has been under scrutiny regarding its plan to reduce its holdings of government bonds, a portfolio currently worth 525 billion pounds. According to a recent report in the Financial Times, the Bank estimated last year that this process would increase long-term interest rates by a relatively small amount – between 0.15 and 0.25 percentage points – which, according to Breeden, isn’t a significant change.

The revised stablecoin framework has no finalized timeline, but Breeden’s comments to the Financial Times signal the BoE is prepared to move away from its original approach before any rules take effect.

2026-05-15 01:04

Bank of England Revisits Stablecoin Limits That Industry Called ‘Cumbersome’

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