The Bank of England is considering a major review of its regulatory framework for sterling stablecoins. Under pressure from the private sector, the institution is reconsidering rules deemed too restrictive, and potentially fatal for the competitiveness of the United Kingdom vis-à-vis the United States and Europe.
In brief
- The Bank of England is reassessing the caps on sterling stablecoins.
- Reserve requirements deemed too strict could be relaxed.
- The crypto sector believes that current rules are holding back innovation in the UK.
The Bank of England loosens its grip on stablecoins
The Bank of England confirmed on May 14, 2026 that it is reviewing several key measures of its future regulatory framework for sterling stablecoins. Deputy Governor Sarah Breeden recognized that certain constraints envisaged could penalize the development of the sector in the United Kingdom.
The most contested point concerns the holding ceilings. The current plan provides that an individual cannot keep more than 20,000 pounds sterling of a single British stablecoin. Businesses would be limited to approximately $13.5 million during a transitional phase.
Added to this is a particularly strict obligation: at least 40% of issuers' reserves should be deposited in the form of unremunerated liquidity with the central bank. For market participants, this requirement greatly reduces the profitability of stablecoins and discourages future issuers.
This reaction is not trivial. Today, the global stablecoin market remains largely dominated by dollar-pegged tokens like Tether and USD Coin. Sterling-backed stablecoins still represent a marginal part of the sector.
The United Kingdom now fears falling behind. As the United States accelerates crypto regulation under the Donald Trump administration, and the European Union gradually rolls out the MiCA framework, London seeks to preserve its financial attractiveness.
London seeks balance between innovation and financial stability
For several years, the Bank of England has taken a cautious approach towards stablecoins. The institution particularly fears a massive flight from traditional bank deposits to tokenized digital currencies.
This risk is taken very seriously. If millions of users suddenly move their funds to regulated stablecoins, some commercial banks could see their liquidity weakened. For the central bank, stablecoins must therefore offer a level of security comparable to traditional payment infrastructures.
But this very conservative vision is beginning to show its limits. Several law firms, fintech companies and crypto platforms have warned that the UK framework risks making local stablecoins less competitive than their US or European equivalents.
The issue goes far beyond simple crypto. Stablecoins are gradually becoming a central part of global digital finance. They are already used in:
- cross-border payments;
- corporate treasury;
- instant settlements;
- DeFi;
- tokenization of financial assets.
In this context, excessive rigidity could push innovative companies to leave London for more favorable jurisdictions.
The change in tone from the Bank of England therefore shows a deeper reality: the major financial powers can no longer ignore the rise of stablecoins. After Bitcoin ETFs, tokenization and strategic BTC reserves, the battle of digital currencies is now entering a new phase.
The Bank of England is now trying to find a line between financial prudence and economic competitiveness. Its future regulatory framework could determine whether the UK becomes a major player in stablecoins or a mere spectator in a dollar-dominated market.
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