Bank of England rethinks pound stablecoin rules

TLDR

The Bank of England is weighing softer, more practical rules for pound?denominated stablecoins after pushback that its initial framework would make them unusable at scale.

1. Earlier BoE plans for pound stablecoins included strict user holding caps and a 40% non?interest reserve lock at the Bank, which industry warned would cripple adoption.
2. Officials are now reviewing those caps and reserve rules, aiming to balance financial stability with letting regulated GBP stablecoins compete with bank deposits and card networks.
3. Next, watch for revised BoE consultations, how the UK lines up with EU MiCA and US rules, and whether tokenized bank deposits win regulatory favor over crypto?native stablecoins.

Deep Dive

1. What The BoE Is Rethinking

In 2025 the Bank of England proposed a regime for pound?backed stablecoins that treated major issuers almost like banks.

Draft plans reportedly included two key constraints:

1. Issuers would hold around 40% of reserves as non?interest?bearing deposits at the BoE.
2. Users would face a temporary individual holding cap of about 20,000 per stablecoin provider.

According to recent summaries of BoE discussions, the Bank is now reconsidering those ownership caps and reserve requirements after feedback that they would prevent pound stablecoins from operating at meaningful scale and make business models uneconomic for regulated issuers.

2. Impact On GBP Stablecoins And Crypto

For issuers, a hard 40% zero?yield reserve slice plus low per?user caps would make UK pound stablecoins expensive to run and unattractive versus dollar stablecoins or traditional payment rails.

If the BoE relaxes caps or lets a larger share of reserves earn interest, regulated GBP tokens could become viable building blocks for UK?facing exchanges, on?chain FX, and DeFi integrations, especially for trading GBP pairs without constant FX into USD.

At the same time, BoE policymakers such as Megan Greene have argued that tokenized bank deposits may ultimately be favored over independent stablecoins as they sit fully inside the banking perimeter and may pose fewer monetary?policy risks than large, free?floating private tokens.

3. What To Watch Next

1. A revised BoE and UK Treasury policy statement clarifying final reserve ratios, user caps, and licensing routes for pound stablecoin issuers.
2. How closely the UK regime tracks or diverges from the EUs MiCA stablecoin rules, which already impose banking?style standards and potential transaction caps on significant tokens.
3. Market response from major issuers and banks, including whether they pursue BoE?compliant GBP tokens, tokenized deposits, or focus instead on dollar stablecoins where rules and liquidity are already deeper.

Conclusion

The Bank of England is not abandoning stablecoin oversight but recalibrating rules that risked making pound tokens impractical.

Where it lands on caps and reserves, and how strongly it favors bank?based tokenized deposits over crypto?native GBP stablecoins, will set the competitive landscape for UK?facing digital money and on?chain finance in the coming years.