Bank of England signals softer stablecoin caps

TLDR

The Bank of England is signalling it will soften its planned caps and reserve rules for UK stablecoins after strong industry pushback.

1. Officials are reconsidering proposed limits of about 20,000 per person and 10 million per business per UK stablecoin, and a 40 percent non?interest reserve requirement.
2. Softer caps and more interest?earning reserves could make GBP stablecoins commercially viable and more competitive with dollar stablecoins, but the UK market is still tiny today.
3. No rule change is final yet, with draft revised rules expected later this year, so firms should treat this as a positive signal rather than a finished regime.

Deep Dive

1. What Is Being Softened

Under a 2025 consultation, the Bank of England (BoE) proposed temporary caps that would limit individuals to about 20,000 in a given UK stablecoin and businesses to around 10 million during a transition period, along with a requirement that at least 40 percent of reserves sit as non?interest?bearing deposits at the BoE, with the rest in short?term UK government debt. These measures were designed to prevent rapid outflows from bank deposits into stablecoins in a stress event and were based on lessons from crises like the Silicon Valley Bank collapse.

Deputy Governor Sarah Breeden has now said these ownership limits and reserve rules may have been overly conservative and confirmed the BoE is actively reassessing both the caps and the 40 percent floor, looking for alternative ways to manage risk without making UK issuance uneconomic, according to reports from the Financial Times summarised by CoinDesk and others.

2. Why It Matters For Crypto

Industry groups, including firms like Coinbase, warned that strict caps are effectively a cap on innovation and would make GBP stablecoins hard to use for payroll, treasury and settlement at scale, as noted in multiple coverage pieces.

The reserve rules are equally important for issuers. At current designs, UK issuers would earn yield on only 60 percent of reserves versus about 88 percent for USDC, and analysts estimate that cutting the non?yielding floor from 40 percent to 20 percent could roughly halve the profit drag per 1 billion in circulation. With sterling stablecoins representing less than 0.5 percent of a roughly 300 billion dollar global market dominated by USDT and USDC, slightly looser rules could determine whether viable GBP tokens emerge or whether activity stays dollar?centric and offshore.

3. What To Watch Next

Breeden and other officials have indicated that revised draft rules are due around mid?2026, with finalisation targeted by year?end, and that the BoE expects to accept applications from systemic stablecoin issuers under this regime.

Key open questions include: how much the per?user caps are raised or whether they are replaced by different safeguards, how low the non?interest reserve floor goes, and how closely the framework aligns with EU MiCA and evolving United States rules. Market participants are also watching whether a clearer UK rulebook attracts major issuers to launch GBP pairs on top exchanges and in DeFi, or whether liquidity remains concentrated in dollar tokens.

Conclusion

The BoEs shift from very tight caps and heavy non?interest reserves toward a more flexible framework signals that UK regulators are listening to stablecoin issuers and are willing to trade some conservatism for competitiveness. For crypto users and builders, this is an encouraging directional move that could eventually support deeper GBP stablecoin rails, but the real impact will depend on the exact numbers in the upcoming draft rules and how quickly issuers choose to build on them.