BoE prepares to ease stablecoin caps

TLDR

The Bank of England is signaling it may relax its planned caps on stablecoin holdings and reserves to keep the UK competitive while still prioritizing financial stability.

1. The BoEs consultation proposed strict temporary caps and a heavy non-interest-bearing reserve requirement that officials now call possibly overly conservative.
2. Looser caps and reserve rules would improve the economics and usability of GBP stablecoins, potentially making them more viable competitors to dollar stablecoins in payments and DeFi.
3. The key unknowns are how far the BoE actually softens these caps in draft rules due mid?2026 and how closely the UK regime aligns with US and EU frameworks.

Deep Dive

1. What The BoE Is Reconsidering

In a November 2025 consultation, the Bank of England proposed that individuals could hold up to 20,000 of a given sterling stablecoin, while businesses faced a 10 million cap, framed as a temporary safeguard during rollout.

It also required issuers to keep at least 40% of reserves in non-interest-bearing deposits at the BoE and the rest in short-term UK government debt, a structure many described as tougher than US and EU regimes.

Deputy Governor Sarah Breeden has since said the approach may have been overly conservative and confirmed the BoE is open to easing both the holding caps and the 40% central bank deposit floor, as reported by outlets such as Coindesk and Cointelegraph.

2. Why Softer Caps Matter For Crypto

Strict caps plus a large non-yielding reserve slice would have made UK-issued stablecoins far less profitable than rivals like USDT and USDC, and less attractive for corporate treasury, settlements, and DeFi use.

With the global stablecoin market around the mid?$300 billion range and sterling tokens still a tiny share, rules that are too tight risk pushing GBP stablecoin issuance to other jurisdictions instead of onshoring it under BoE oversight.

If the BoE lowers the non-interest-bearing share and relaxes caps, issuers can earn more on reserves and support larger balances, which makes GBP stablecoins more credible as payment and settlement rails rather than niche experiments.

3. What To Watch Next

Updated draft rules are expected around mid?2026, with finalization targeted by year?end; those drafts will show whether caps are scrapped, raised, or kept as narrow transition limits.

Watch how responsibilities split between the BoE (systemic payment stablecoins) and the FCA (other tokens), and how far UK rules converge with the US GENIUS Act and EU MiCA to minimize regulatory arbitrage.

There is also a risk that if the BoE stays much stricter than other regimes, serious GBP stablecoin liquidity may remain offshore, limiting UK relevance even as it claims leadership in digital money.

Conclusion

The BoEs move to ease stablecoin caps is less a U?turn and more a recalibration between safety and competitiveness.

If the final framework meaningfully relaxes holding limits and reserve constraints while preserving strong redemption and risk controls, GBP stablecoins could become a more serious part of global crypto and payment infrastructure.