Bank of England to Scale Back Planned Strict Stablecoin Rules

The Bank of England is signaling a willingness to soften its planned stablecoin regulations, with a senior official telling lawmakers the central bank is open to revisiting key restrictions before draft rules are published in June 2026.

What the Bank of England Is Expected to Change

In November 2025, the Bank of England launched a consultation on regulating systemic sterling stablecoins. The proposal required issuers to hold up to 60% of backing assets in short-term UK government debt, with at least 40% kept as unremunerated deposits at the central bank.

The same consultation proposed temporary holding limits of £20,000 per coin for individuals and £10 million for businesses.

On March 11, 2026, Deputy Governor Sarah Breeden told a House of Lords committee that the Bank was prepared to reconsider both proposals. She said the Bank would revisit whether the 60:40 backing split had been overly conservative.

“On holding limits, we are genuinely open to other ways of achieving the objective.”

— Sarah Breeden, Deputy Governor, Bank of England

It is important to note that no final rule changes have been confirmed. The strongest verified evidence as of mid-May 2026 is that the Bank is open to revisions, not that it has already executed them. Draft rules remain scheduled for June 2026, with finalization and applications targeted by year-end.

Why UK Regulators May Be Softening Their Stance

The November 2025 consultation was itself already a retreat from a stricter position. A 2023 discussion paper had proposed that systemic stablecoin issuers hold 100% of backing assets as unremunerated Bank of England deposits, a requirement widely seen as unworkable for private issuers.

The shift reflects a tension between financial stability and competitiveness. With global stablecoin market capitalization sitting near $293 billion, the UK risks pushing issuers toward more permissive jurisdictions if its rules prove too restrictive. Similar dynamics are playing out in other regulatory debates, including efforts to clarify crypto legislation in the United States.

Breeden noted that 94% of users could manage their full salary within the proposed £20,000 individual holding limit, suggesting the Bank views the cap as proportionate. Still, industry pushback on both the holding limits and the reserve mix appears to have prompted genuine reconsideration.

What It Means for Stablecoin Issuers and the UK Crypto Market

If the Bank does loosen its reserve and holding-limit requirements, the compliance burden for firms considering sterling stablecoin operations in the UK would drop materially. That could encourage new entrants into a market currently dominated by dollar-denominated stablecoins, with Tether alone commanding a market cap near $190 billion.

Governor Andrew Bailey added a cross-border dimension on May 8, 2026, warning that stablecoins “are only going to work if we have international standards” and predicting a coming regulatory friction with the United States. The comment underscores that even a softer domestic framework will need to interoperate with rules set elsewhere, a challenge that extends well beyond the UK’s borders and touches on broader questions of crypto enforcement coordination internationally.

For now, the timeline matters most. The June 2026 draft rules will reveal whether the Bank’s stated openness translates into meaningfully different requirements, or whether the core structure of the November 2025 proposal survives largely intact. Firms weighing UK expansion, from stablecoin issuers to crypto-native payment providers, will be watching closely.

Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency and digital asset markets carry significant risk. Always do your own research before making decisions.