Bank of England signals softer stablecoin rules

TLDR

The Bank of England is signalling it will relax parts of its planned UK stablecoin regime after strong industry pushback.

1. Officials are reconsidering strict caps on how much sterling stablecoin users can hold and a 40% non?interest reserve requirement, which Deputy Governor Sarah Breeden called overly conservative.
2. Softer rules could make pound?pegged stablecoins more commercially viable and help London compete with US dollar tokens like USDT and USDC, though financial stability safeguards will remain tight.
3. The key signals to watch are the draft rule text due in 2026, where the final reserve floor and any revised holding caps will reveal how crypto?friendly the UK really becomes.

Deep Dive

1. What The BoE Is Actually Softening

Under the Bank of Englands November 2025 consultation, systemic sterling stablecoin issuers would have to keep at least 40% of reserves in non?interest?bearing deposits at the central bank, with the rest in short term UK government debt, and users would face temporary caps of around 20,000 per coin for individuals and roughly $13.5 million for businesses during a transition period. Regulators framed this as protection against rapid outflows from bank deposits into stablecoins during stress, but firms warned it was commercially unworkable and hard to police across platforms.

Breeden has now told the Financial Times and lawmakers that these rules may have been overly conservative and that the Bank is genuinely open to alternative ways of managing risk, including revisiting the 40% reserve floor and the proposed ownership caps, as reported by outlets such as CoinDesk and Cointelegraph and summarized in a recent explainer.

2. Why This Matters For Crypto Users

Industry groups argued that forcing 40% of reserves to sit at the BoE earning nothing, plus tight holding limits, would crush margins for UK issuers and leave sterling stablecoins uncompetitive versus US and EU frameworks, where issuers can keep more yield?bearing assets. Analyses note that while the global stablecoin market exceeds $300 billion, sterling?pegged tokens account for less than 0.5%, with most volume in dollar coins such as Tether USDt (USDT) and USD Coin (USDC), as highlighted in coverage from CCN and Decrypt.

BoE officials now say they want a regime where stablecoins are treated as a new form of money that can deliver benefits to the users, not just as a systemic threat, while still focusing on liquidity and redemption safeguards.

3. What To Watch Next

Updated draft rules are expected around June 2026, with implementation targeted by year end, according to detailed summaries of the consultation timeline on CoinMarketCaps news feed. Those drafts will clarify three critical points:

1. Whether the 40% non?interest reserve floor is cut and by how much.
2. Whether per?user holding caps are removed, raised, or replaced by softer tools.
3. How responsibilities are split between the Bank of England (systemic payment stablecoins) and the FCA (non?systemic issuers).

The Bank is also warning about a coming clash with looser US standards, which could export stress into the UK if dollar tokens face runs while GBP rules are stricter, so some conservatism will remain.

Conclusion

The Bank of England is not abandoning caution on stablecoins, but it is clearly moving away from its most restrictive ideas after industry pressure. For crypto users and issuers, the opportunity is a more usable, economically viable sterling stablecoin regime, while the risk is that lingering tight rules or international frictions still keep most liquidity concentrated in dollar stablecoins.