Bank of England Comes Around on Stablecoins

The Bank of England’s (BOE) position on stablecoins is evolving to a more friendly stance, but according to the bank’s deputy governor, constructive dialogue with the industry is still lacking.

The UK’s central bank launched a consultation on stablecoins in November last year. Some of the proposed requirements drew the ire of crypto industry representatives, who claimed they could stifle innovation. 

Over the past few months, the bank has been working with industry groups to develop its stance on stablecoins. These include revising backing requirements and rethinking account limits. 

Some industry observers believe that the bank is coming around on stablecoins, but there is still work to be done.

Bank of England open to feedback on stablecoin risk

On Nov. 10, 2025, the BOE released a document outlining its vision for a stablecoin regulatory regime. This came two years after an initial discussion paper which, according to the bank, included the perspectives of “banks, non-bank payment service providers, payment system operators, trade associations, academia, and individuals.”

At the time, industry observers told Cointelegraph that BOE was overstating the perceived risks that stablecoins pose to the UK economy. Tom Rhodes, chief legal officer at UK-based stablecoin issuer Agant, said at the time that the bank was “disproportionately cautious and restrictive.”

One of the more controversial measures was stablecoin holdings limits, namely 20,000 pounds for individuals and 10 million pounds for businesses that accept it as a form of payment.

Now, it appears that the bank is coming around. Speaking before the House of Lords Financial Services Regulation Committee on Wednesday, BOE Deputy Governor Sarah Breeden told MPs that it is open to reconsidering those limits. 

Breeden said that the proposed limits were to mitigate the risk of a large migration of deposits to stablecoins, which has the potential to destabilize banks.

“We proposed holding limits as a way of managing that risk. We are open to feedback on other ways of achieving it,” she said.

However, feedback itself also seems to be an issue, at least according to Breeden. She said, “The pressure from the industry to do it in a different way is very real. What we’ve been a bit disappointed with, is nobody said, ‘Why not do it this way?’” 

“I don’t think we’ve yet had constructive engagement on a different way to solve the problem that I might have hoped for. Instead, what we’ve had is ‘don’t do this,’ and ‘I understand why you want to do something’ as opposed to filling the gap.”

Rhodes told Cointelegraph on Thursday that this isn’t necessarily the case. “Over the past two years we have reviewed thousands of pages of consultations from the FCA and the Bank, attended numerous roundtable meetings, and submitted hundreds of pages of input both ourselves and as part of trade associations.”

He said that the main challenge for the industry and regulators is that they are making a “comprehensive regulatory regime for a market that has yet to develop.” 

Rhodes explained:

“It’s not possible to provide concrete data in the circumstances, which is why lighter touch principles-based regimes are appropriate at this nascent stage.” 

Nick Jones, the founder and CEO of UK-based digital assets platform Zumo, said, “Industry groups have been working hard, and to tight deadlines, to make tangible recommendations.”

He said the feedback could be more constructive if the bank followed the Financial Conduct Authority’s (FCA) Spring model. These time-boxed workshops focus on practical applications of the technology to answer regulators’ questions. 

The ‘multi-moneyverse’ and what’s next for stablecoins in the UK

Breeden opened her remarks with assurances that at the bank, “we do want to see tokenized money issued by non-banks.”

“We can have what I call a ‘multi-moneyverse’ with greater choice and competition today.”

Such a system, she said in a September speech, is “characterised by choice across different forms of money and payment; with technology driving faster, cheaper, and more innovative payments for the benefit of business, households, and users of financial markets; and — critically — with the whole system underpinned by trust in money itself.”

Inter-monetary competition and its purported benefits have been a core argument from the crypto industry. Rhodes said, “Stablecoins being part of a competitive multi-moneyverse represents a substantial and positive evolution in the Bank’s thinking.”

Related: UK dodges ‘US malaise’ as regulator finalizes crypto rules

However, Rhodes noted that this was in “sharp contrast” to BOE Governor Andrew Bailey’s statements, where “he doesn’t see stablecoins as a substitute for commercial bank money.”

Jones said, “Over time, we’ve seen the Bank of England’s scepticism towards digital assets start to dissipate.” It’s “encouraging” that the central bank is more receptive to competing forms of money and that pound sterling-backed stablecoins can co-exist with fiat money.

“It’s clear that different emerging types will fit different use cases — for example, large institutional capital is more comfortable with tokenised deposits while smaller retail payments companies can tap into the network effect of stablecoins,” he said.

The next step, per Rhodes, is a final policy position from the BOE, but revisions are still possible.  

The industry is still pushing to remove the holding caps and scrap bank-like capital rules for issuers. Jones said that the latter “are inappropriate for fully-backed issuers, and should be replaced with oversight focused on reserve quality and transparency.”

They also want a reconsideration of reserves. So far, BOE requires issuers to hold 40% of reserve assets in unremunerated Bank of England deposits and up to 60% in high-quality, short-term UK government debt. 

This is based on past runs like the Silicon Valley Bank collapse in 2023 which resulted in the USDC stablecoin losing its peg. Breeden told Reuters, “Those numbers are broadly in line with that. That’s why we’re proposing 40% rather than a smaller number.”

“Regulators should perhaps consider remunerating a portion of the 40% held at the Bank of England to help maintain commercial viability,” said Jones.

“The UK can be one of the leaders in stablecoins, but only if regulation is proportionate and competitive.”

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