Bank of England rethinks sterling stablecoin limits

TLDR

The Bank of England (BoE) is signalling that it may relax proposed caps on sterling stablecoin holdings after strong industry pushback.

1. BoE officials say they are "genuinely open" to alternatives to strict holding limits on pound stablecoins, which were initially set in the 10,00020,000 range for individuals.
2. The current framework also includes heavy reserve and self-custody restrictions, which firms argue could make UK-issued GBP stablecoins uncompetitive and drive activity offshore.
3. The final shape of the rules will emerge from the ongoing consultation and a House of Lords review, making the next 1224 months key for anyone building or using GBP stablecoins.

Deep Dive

1. What The BoE Is Rethinking

In a hearing at the House of Lords Financial Services Regulation Committee, BoE Deputy Governor Sarah Breeden said the central bank is "genuinely open to other ways" of managing risks from sterling stablecoins, beyond hard holding caps for users. Cointelegraph reports that the draft regime contemplates limits in the 10,00020,000 range per individual and separate caps for businesses.

The caps were designed to prevent a rapid shift of deposits from banks into stablecoins that could reduce lending to UK households and companies. At the same time, the BoE has outlined a regime where systemic issuers can hold BoE deposit accounts and back tokens with short term UK gilts and central bank deposits, giving them bank-like plumbing while remaining fully reserved.

2. Why Industry Pushback Is Strong

Industry groups argue that the combination of caps and reserve rules risks making GBP stablecoins uneconomic. A summary of the proposals notes transitional holding limits of 20,000 per individual and 10 million per business, plus a requirement that 40% of reserves sit as unremunerated deposits at the central bank, which critics say would crush returns and usability for payment-focused coins CoinLineup overview.

Breeden herself acknowledged the concern that harsh limits could "signal UK hostility to crypto" and push issuers and payment firms to other jurisdictions Cointelegraph. Against that, the BoE is prioritizing financial stability and sees the risk of a credit squeeze as real, not theoretical.

3. How This Shapes GBP Stablecoins And What To Watch

The BoEs November consultation on sterling-denominated systemic stablecoins closed in February, and both the BoE and Parliaments House of Lords are now testing whether the framework is "measured and proportionate" CoinLineup overview. Parallel to this, the Financial Conduct Authority is preparing a stablecoin sandbox and the UK is rolling out a broader cryptoasset authorization regime for 20262027 %%CKPROTECTED1%%.

One important constant is that unhosted (self-custody) wallets holding sterling stablecoins would not be permitted within the UK regime, even if caps are softened Cointelegraph. That pushes designs toward regulated intermediaries and bank-like issuers rather than pure DeFi-style GBP coins.

Conclusion

The BoE is not abandoning tight oversight of sterling stablecoins, but it is reconsidering how strict user limits and reserve rules need to be to balance innovation with credit stability. The eventual regime will likely favor well-capitalized, highly supervised issuers over borderless, self-custodied GBP tokens, so the regulatory outcome over the next couple of years will determine whether UK pound stablecoins become a serious on-chain payment rail or a niche product.