Bank of England Backtracks on Stablecoin Rules After Industry Backlash

by

Bank Of England To Ease ‘Overly Conservative’ Stablecoin Rules After Industry Backlash – Report

The Bank of England is likely to ease its proposed rules for stablecoins and is considering other options to manage risks. This change comes after pushback from the UK crypto industry and several members of Parliament who raised concerns about the original restrictions.

BoE Calls Stablecoin Plans ‘Overly Conservative’

Sarah Breeden, a deputy governor at the Bank of England, announced on Thursday that the bank is planning to soften its rules for stablecoins, which have been a source of debate.

In a recent interview with the Financial Times, Breeden acknowledged that the regulator’s initial proposal might have been too cautious and stated they are actively exploring possible fixes.

In November, the Bank of England suggested limiting how many stablecoins individuals and firms can own. This proposal aims to reduce the risk of large, sudden withdrawals of money from traditional banks.

The rule would have limited how much money individuals and businesses could hold, setting a range of £10,000 to £20,000 for individuals and £10 million for businesses. This approach mirrored plans for a digital pound, which were also designed to protect the financial system.

As a crypto investor, I’m paying attention to what the central bank is suggesting regarding stablecoins. Basically, they’re proposing that companies issuing big stablecoins should keep at least 40% of the reserves backing those tokens as deposits with the central bank, and those deposits wouldn’t earn interest. They say this is to make sure everyone can reliably redeem their stablecoins, even if things get tough in the market, and to build trust in these digital assets.

Back in March, Breeden indicated she was willing to consider the Bank of England’s suggestions when she spoke to the House of Lords Financial Services Regulation Committee. While she acknowledged some practical issues with the proposed cap, she explained that these were intended to help the system adjust smoothly as it evolved.

Breeden explained to the Financial Times that the 60:40 rule for asset allocation stemmed from lessons learned during times of financial strain. Specifically, they looked at how much money customers pulled out of Silicon Valley Bank in 2023 and similar events to understand potential cash flow problems.

Central Bank To Rethink Approach

Leaders in the UK’s crypto and payment sectors have voiced strong opposition to a new plan from the financial regulator. They believe the proposal could harm the pound and make the UK less competitive compared to the United States and the European Union.

Simon Jennings, who leads the UK Cryptoasset Business Council, argues that restrictions on cryptoassets wouldn’t be effective. He explains that enforcing such limits would necessitate a complicated and expensive new system – possibly involving digital identification or constant monitoring of digital wallets.

In December, a group of British lawmakers also spoke out against the Bank of England’s policies, arguing they could hinder the UK’s ambition to become a major player in the digital assets sector.

In a report released on Thursday, Breeden stated that industry feedback indicates the proposed limits are difficult to work with, especially since they are intended to be temporary. He also noted that companies generally prefer to hold more assets that generate income, as this positively impacts their profits.

The central bank is actively considering new approaches to ensure stablecoins can thrive and benefit users. However, because stablecoins function as a form of money, the bank wants to prioritize safety and security for everyone involved.

Read More

2026-05-15 11:57