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The Bank of England is considering easing parts of its proposed stablecoin regulatory framework following concerns from industry stakeholders over the potential impact on innovation and operational efficiency.
Deputy Governor for Financial Stability at the Bank of England, Sarah Breeden, disclosed that the central bank is reassessing aspects of the proposed restrictions as stablecoins become increasingly integrated into the financial system.
Speaking on the review, Breeden said the Bank is exploring alternative approaches to managing financial stability risks without imposing unnecessarily burdensome operational requirements on firms.
“We are looking very hard at whether there are different ways we can manage what we think is an important risk as stablecoins come into play,” she said.
Under the initial proposals released late last year, individuals in the United Kingdom would have been temporarily restricted to holding a maximum of £20,000 per stablecoin, while businesses would face ownership limits of up to £10m.
However, according to Breeden, industry participants argued that implementing such restrictions would be cumbersome and could create operational difficulties for firms operating within the digital asset ecosystem.
“What we have heard from industry is that the way we have proposed to implement limits is cumbersome operationally for a temporary measure. So we are genuinely open to thinking whether there are other ways of achieving our objective,” she stated.
The Bank of England is also reviewing proposals that would require systemic stablecoin issuers to place at least 40 per cent of reserve assets backing their digital currencies in non-interest-bearing deposits at the central bank, with the remainder invested in government bonds and other liquid assets.
Breeden acknowledged concerns from industry operators who argued that the proposed reserve structure could weaken the commercial viability of stablecoin business models by limiting their ability to generate returns on reserve holdings.
“Perhaps not surprisingly, the industry would prefer to hold more interest-earning assets, as that goes to their bottom line,” she said, adding that the central bank would reassess whether its original proposals had been overly conservative.
The proposed framework had previously attracted criticism from industry groups including the Payments Association and Innovate Finance.
The organisations warned that the restrictions could stifle innovation, discourage investment, and place UK fintech firms, challenger banks, and stablecoin startups at a competitive disadvantage in the rapidly evolving digital payments market.
The latest review signals a more consultative approach by the Bank of England as regulators globally continue to balance financial stability concerns with the growing demand for digital asset innovation and stablecoin adoption.
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