London, 11 March 2026 – The Bank of England (BoE) has signalled it is open to revising proposed rules governing stablecoins pegged to the British pound, as policymakers weigh how to regulate digital assets without stifling financial innovation.
Speaking before a House of Lords committee, BoE Deputy Governor for financial stability Sarah Breeden said the central bank is “genuinely open” to adjusting its proposed regulatory framework if alternative approaches can achieve the same financial stability objectives.
Stablecoins are digital tokens designed to maintain a stable value relative to a traditional currency or asset, often backed by reserves such as government bonds or cash. The Bank of England launched a consultation in November 2025 outlining rules for “systemic” sterling-denominated stablecoins that could eventually be used widely for everyday payments.
Controversial Reserve and Holding Limits
The proposed framework has drawn criticism from parts of the cryptocurrency industry, particularly over strict reserve requirements and caps on holdings.
Under the proposal, stablecoin issuers would be required to hold 40% of their backing assets as deposits at the Bank of England, which would not earn interest. The remaining portion could be invested in safe assets such as short-term government debt.
The central bank also proposed temporary limits on stablecoin holdings, around £20,000 for individuals and £10 million for businesses, to prevent large-scale shifts of bank deposits into digital tokens that could disrupt traditional banking funding models.
Industry groups argue these measures could make a sterling-based stablecoin market commercially unviable and push users toward dollar-denominated alternatives such as USDT or USDC.
Bank of England Seeks Constructive Industry Input
Breeden said regulators have been disappointed that critics have largely rejected the proposals without presenting workable alternatives.
She indicated the central bank is willing to consider different regulatory structures, including adjustments to the 60:40 asset-backing split, if industry participants can demonstrate how those changes would still protect financial stability.
Despite the policy debate, sterling-denominated stablecoins remain a tiny portion of the global crypto ecosystem, which is still dominated by dollar-linked tokens used primarily within digital asset markets rather than mainstream payments.
Draft Rules Expected in June
The Bank of England is expected to publish draft stablecoin regulations for further consultation in June, part of the United Kingdom’s broader effort to establish a regulatory regime for digital assets and maintain London’s position as a global fintech hub.
The discussions highlight the delicate balance regulators face worldwide: encouraging innovation in digital finance while ensuring new forms of money do not create systemic risks for the banking system.
