BoE weighs alternatives to stablecoin holding limits following industry pushback
Bank of England Considers New Approaches to Stablecoin Regulation
LONDON, May 19 (Reuters) - The Bank of England is weighing alternatives to holding limits on stablecoins and will publish draft rules next month, it said on Tuesday.
Potential Alternatives to Holding Limits
• A cap on stablecoins that could be issued could address concerns about the impact of the technology on lending by banks at lower cost to the sector than holding limits, Deputy Governor Sarah Breeden said at CityWeek 2026.
Previous Proposals and Industry Backlash
• The BoE had previously said it would introduce holding limits of 20,000 pounds ($26,786) per individual and 10 million pounds per business for sterling stablecoins that are widely used for everyday payments, prompting a backlash from industry.
Understanding Stablecoins and Their Role
• Stablecoins are typically pegged at a fixed rate to the U.S. dollar or another major currency, and aim to be an alternative to the existing banking system for making domestic or international payments.
Concerns Over Financial Stability
• The BoE has voiced concern that a rapid outflow of bank deposits into stablecoins risked endangering financial stability and could cause a credit crunch.
• The cryptoasset industry has said the BoE's proposals are among the strictest in the world.
Global Context and Regulatory Competition
• The U.S. embrace of cryptocurrencies under President Donald Trump has forced the UK to assess if its plans to regulate the sector remain competitive.
Industry Reactions and Suggestions
• Coinbase's UK head of policy, Katie Harries, said a stablecoin issuance cap "may be more workable — depending on where the cap is set — but critically no other jurisdiction is deeming it necessary to cap innovation in the way that the BoE is still considering".
• Simon Jennings, executive director at the UK Cryptoasset Business Council, said it was positive that the BoE was considering alternatives to holding limits but said interventions should be tied to supervisory data and metrics, instead of caps or limits imposed at the outset.
Next Steps for BoE Regulation
• The BoE will publish draft rules next month and finalise them by year-end "in line with the U.S. timeline", Breeden said.
• Banks can issue stablecoins so long as they are issued from a non-deposit-taking entity using distinct branding that can "reference" the parent brand, she added.
Additional Information
($1 = 0.7467 pounds)
(Reporting by Phoebe Seers; Editing by Mark Potter and Emelia Sithole-Matarise)
