The Bank of England is reviewing proposed sterling stablecoin limits after industry backlash over scalability concerns.
The Bank of England (BoE) is reconsidering parts of its proposed framework for sterling stablecoins after industry participants said the draft rules were operationally unworkable, according to the Financial Times. Deputy Governor Sarah Breeden said the central bank is "looking very hard" at alternative approaches.
The BoE launched a consultation in November on a framework for "systemic" sterling stablecoins that would cap individual holdings at £20,000 ($27,000) and business holdings at £10 million ($13.5 million). Issuers would also be required to place at least 40% of reserves at the BoE without earning interest, with the remainder held in short-term UK government debt or other liquid assets.
Breeden acknowledged that industry feedback raised concerns about the holding limit design. "What we have heard from industry is that the way we have proposed to implement limits is cumbersome operationally for a temporary measure," she said, according to the FT. "So we are genuinely open to thinking whether there are other ways of achieving our objective."
The BoE is also reviewing the 40% reserve requirement, which was designed based on lessons from past financial crises. Breeden noted that industry participants would prefer to hold more interest-earning assets, and said the central bank would assess whether its original thinking had been "overly conservative." Non-sterling stablecoins and those primarily used for crypto trading, such as $USDT and $USDC, would remain under Financial Conduct Authority (FCA) oversight under the existing proposal.
The reassessment comes as the US advances its own #stablecoin legislation. The GENIUS Act, signed into law in July by President Donald Trump, requires issuers to maintain full reserve backing and provide monthly disclosures. The Senate Banking Committee is also scheduled to mark up the broader CLARITY Act crypto market structure legislation.
Industry opposition to the UK framework has been vocal. In March, Coinbase's then-vice president for international policy, Tom Duff Gordon, told the House of Lords Financial Services Regulation Committee that the BoE's holding limits would prevent sterling #stablecoins from scaling into settlement infrastructure for tokenized markets.
George Morris, digital assets partner at law firm Simmons & Simmons, welcomed the potential revisions, but warned that broader Treasury and FCA proposals could still create obstacles, particularly for merchants integrating payment layers for non-UK stablecoins who may face full FCA authorization requirements.
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