Proposed business cap of £10 million also under review as Bank of England aims to avoid stifling innovation while managing deposit-outflow risk.
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The Bank of England is reviewing its draft stablecoin rules after Deputy Governor Sarah Breeden acknowledged the initial proposal may have been too conservative. The draft rules included a £20,000 ($27,000) cap on individual holdings and a £10 million ($13.5 million) limit for businesses. Those caps were designed to reduce the risk of deposit outflows from traditional banks and to prevent a liquidity crisis if a major stablecoin lost its peg.
The simple read is that the BoE is softening its stance, potentially opening the door for wider stablecoin adoption in the UK. The better market read is that the central bank is now weighing the trade-off between financial stability and the risk of pushing stablecoin activity into less regulated jurisdictions. The initial caps, if implemented, would have made the UK one of the most restrictive major economies for stablecoin use, likely driving issuers and users toward offshore platforms or unregulated peer-to-peer markets. The review is part of a broader reassessment of crypto regulation globally. For context, see our crypto market analysis.
The proposed individual cap of £20,000 was intended to mirror deposit insurance limits and prevent a run on stablecoin issuers that could spill over into the broader financial system. Breeden’s comments, reported by the Bank of England, signal that the central bank now sees that level as potentially too low to support legitimate use cases, including payments, remittances, and decentralized finance (DeFi) activity.
The business cap of £10 million faced similar criticism from industry participants who argued it would cripple institutional adoption. A corporate treasury holding stablecoins for cross-border settlement or as a cash management tool would quickly hit that ceiling. The review suggests the BoE is open to raising both limits, though no new figures have been proposed.
Key elements of the draft rules under review:
The BoE’s original concern centered on the risk that large-scale stablecoin adoption could drain deposits from commercial banks. If households and businesses move funds into stablecoins, banks lose a cheap and stable funding source. That could raise lending rates and reduce credit availability. The caps were a blunt instrument to limit that outflow.
The review signals a more nuanced approach. Rather than capping holdings, the BoE may focus on requiring stablecoin issuers to hold high-quality liquid assets and to meet redemption requirements that mimic bank-like liquidity coverage ratios. That would address the run risk without imposing arbitrary limits on users. For traders, the key question is whether the final rules will include a transition period or a tiered system that allows higher limits for accredited investors or regulated entities.
The global context matters. The EU’s Markets in Crypto-Assets (MiCA) regulation imposes no hard caps on stablecoin holdings but requires issuers to hold reserves and obtain authorization. The UK’s initial proposal was seen as more restrictive, and Breeden’s comments bring it closer to the international norm. Jurisdictions that adopt overly restrictive rules risk losing stablecoin activity to more permissive hubs, a dynamic the BoE appears to recognize.
The UK has been trying to position itself as a post-Brexit financial hub for digital assets. The Financial Conduct Authority (FCA) has already registered several crypto firms, and the government has signaled support for tokenization and distributed ledger technology in capital markets. Overly restrictive stablecoin rules would undercut that ambition.
If the BoE raises the caps significantly, the UK could become a more attractive destination for stablecoin issuers looking for a clear regulatory framework. That would benefit exchanges, brokers, and payment firms operating in the UK. For UK-based traders, the choice of broker matters; see our list of best crypto brokers. It would also make GBP-denominated stablecoins more viable, potentially reducing reliance on USD-pegged coins for domestic transactions. The alternative is a fragmented market where UK users access stablecoins through offshore entities, leaving the BoE with less visibility and control.
The next concrete marker is the publication of the BoE’s revised consultation paper, expected in the coming months. The industry will watch for any new proposed limits, the treatment of algorithmic stablecoins, and the interaction with the FCA’s cryptoasset regime. The signal from Breeden is enough to shift sentiment. It is not enough to change compliance plans. For traders and platforms, the review keeps the UK in play as a potential hub. The final numbers will determine whether that potential is realized.
Prepared with AlphaScala research tooling and grounded in primary market data: live prices, fundamentals, SEC filings, hedge-fund holdings, and insider activity. Each story is checked against AlphaScala publishing rules before release. Educational coverage, not personalized advice.