What to know:
- Bank of England reviews reserve limits following sustained crypto industry criticism today.
- Stablecoin issuers oppose restrictive holding caps affecting Britain’s digital finance competitiveness.
- Trump-backed US crypto regulations increase pressure on UK policymakers significantly.
Bank of England officials are reconsidering proposed stablecoin restrictions following criticism from crypto firms and financial industry participants. According to a report by the Financial Times, Deputy Governor Sarah Breeden confirmed that regulators are reviewing ownership caps and reserve requirements after companies argued the framework could weaken Britain’s position within digital finance markets.
Bank of England Reconsiders Stablecoin Reserve Requirements
The proposed framework targeted systemic sterling stablecoins and introduced strict reserve and holding conditions. Under the original plan, individuals would only hold up to £20,000 in sterling stablecoins, while businesses would face a £10 million cap. Additionally, issuers would place at least 40% of reserves inside the Bank of England without earning interest payments.
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Several industry participants argued that those restrictions could prevent stablecoins from expanding into large-scale payment infrastructure. Consequently, regulators are now examining alternative measures that still support financial stability without placing excessive pressure on issuers.
Breeden reportedly noted that firms considered the implementation process difficult, particularly regarding temporary holding limits. Besides that, many companies preferred reserve structures, allowing issuers to maintain more income-generating assets rather than large non-interest-bearing deposits.
US Stablecoin Regulation Increases Competitive Pressure
Britain’s reassessment comes while the United States continues advancing stablecoin regulation more aggressively. President Donald Trump signed the GENIUS Act into law, requiring stablecoin issuers to maintain full reserve backing alongside monthly disclosures. Meanwhile, lawmakers continue discussing broader crypto market structure legislation through the Clarity Act.
That momentum has increased pressure on British regulators to maintain competitiveness within digital asset markets. Dollar-backed stablecoins already dominate global liquidity, while sterling-backed alternatives still struggle to gain meaningful traction internationally.
Meanwhile, former Coinbase international policy executive Tom Duff Gordon warned lawmakers that holding caps could prevent sterling stablecoins from supporting tokenized financial markets effectively. Regulators are expected to release updated draft rules before the end of June, with the final framework likely arriving later this year.
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