Bank of England Faces Lawmaker Calls to Ease Stablecoin Plans

The Bank of England is under pressure from UK lawmakers to soften its proposed stablecoin rules. Parliamentarians warned Wednesday that overly strict requirements could block the development of a sterling-backed digital currency market before it gets off the ground.

The pushback signals a widening gap between the BoE's cautious stance and the government's ambition to make the UK a crypto hub. Lawmakers argue that a rigid framework would push stablecoin issuers to more permissive jurisdictions, undermining London’s post-Brexit fintech strategy.

What Lawmakers Want Changed

The core complaint is that the BoE’s draft rules are too prescriptive on reserve composition, capital buffers, and custody requirements. Critics say those thresholds would make it uneconomical to issue a pound-pegged stablecoin at scale, especially for smaller firms.

UK legislators are not asking for zero oversight. They want a proportional regime that treats stablecoins more like e-money than bank deposits, a structure that already exists under the Financial Conduct Authority framework. The message is that the BoE’s current approach could cede the sterling stablecoin market to dollar-based alternatives or offshore competitors.

Sector Read-Through: Sterling-Backed Tokens in Limbo

The read-through is direct. Any moderation in the BoE's stance would improve the business case for sterling-denominated stablecoins, which currently face an uncertain regulatory path. Payment firms and crypto exchanges that have been waiting for clarity would be first to adjust product roadmaps.

Globally, the outcome matters beyond the UK. The US and the EU are also crafting stablecoin rules, and the UK’s choice will serve as a reference point for other mid-sized economies. A too-stringent UK regime could fragment the market, while a pragmatic one could attract issuers looking for a credible yet workable license.

For context, stablecoin velocity has surged to 49.7x as crypto ETF outflows deepen, showing the asset class remains highly transactional. The BoE’s rulebook will determine whether that velocity shifts into pounds or stays concentrated in dollars. Read more on stablecoin velocity.

Regulatory coordination is also tightening across the Atlantic. The NYDFS and the European Banking Authority recently signed a pact to harmonize stablecoin oversight, a signal that multijurisdictional compliance is becoming the norm. UK rules that deviate sharply from that trend would put local issuers at a disadvantage. See the NYDFS-EBA agreement.

Next Decision Point: BoE Consultation Response

The BoE is still in a consultation phase. Lawmaker pressure increases the odds that the final rules will be lighter than the draft. The next concrete marker is the BoE’s response to the parliamentary feedback, expected later this year. If the central bank holds firm, expect lobbying to intensify and sterling stablecoin projects to stall further. If it bends, the UK could see a wave of license applications from both domestic startups and international issuers looking for a GBP on-ramp.