Bank of England Signals Rethink on £20,000 Cap for Sterling Stablecoins

The Bank of England is preparing to revisit some of its toughest proposals for regulating sterling-denominated stablecoins after Deputy Governor for Financial Stability Sarah Breeden said the central bank may have been overly cautious. The shift follows sustained pushback from crypto firms, which warn the UK could lose ground to competing jurisdictions on digital-asset innovation. In comments to the Financial Times, Breeden said the BoE is exploring alternatives to ownership limits and reserve rules that the industry has described as unworkable. Late in 2025, the BoE floated a plan to cap individual holdings of sterling stablecoins at £20,000 and business holdings at £10 million. It also proposed that issuers place at least 40% of their backing assets at the BoE on a zero-interest basis, with the remainder held in sovereign bonds and other liquid instruments. The BoE's own analysis indicated the £20,000 ceiling would apply to roughly 94% of consumers, allowing typical users to hold about 2.1 times their monthly income in stablecoins. A £10 million corporate cap, the analysis suggested, would sharply limit treasury operations. The global stablecoin market is about $318 billion, based on CoinGecko data, and remains dominated by dollar-pegged tokens such as Tether's USDT and Circle's USDC. Sterling-based stablecoins make up less than 0.5% of the total, though regulators see potential benefits for payments and financial infrastructure. Standard Chartered estimates the overall market could reach $2 trillion by 2028, potentially generating up to $1 trillion in additional demand for US Treasury bills. Regulatory competition is intensifying. The US has advanced the GENIUS Act, creating a federal framework that offers issuers greater operational flexibility, while the EU's Markets in Crypto-Assets Regulation has been in force since mid-2024. During the BoE's consultation, which concluded in February 2026, crypto firms argued the proposed rules would drive stablecoin activity offshore. Breeden acknowledged concerns that the measures could make UK stablecoins less competitive and harder to run. She added that the reserve approach was shaped by stress scenarios seen in episodes such as the Silicon Valley Bank collapse, but said the BoE is reassessing whether its assumptions were too conservative.