Bank of England reconsiders strict stablecoin regime

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Stablecoins Discussion Paper, 2023. Source: Bank of England The central bank argued that limits were needed to avoid a sudden outflow of deposits from commercial banks into new forms of “tokenised” money if a large stablecoin were rapidly adopted for payments. Related: Bank of England chief says global stablecoin rules will ‘wrestle’ with US Industry groups and prospective issuers countered that the caps were operationally cumbersome, hard to supervise across platforms, and could deter serious institutional use of regulated UK stablecoins in areas like corporate treasury, payroll and settlement. Breeden has been one of the most cautious voices on stablecoins within the BoE. In November 2025, she warned that diluting the rules too far could damage financial stability, stressing that stablecoins are money-like instruments that must be at least as safe and robust as existing payments infrastructure. At the time, she backed stringent liquidity requirements that would force stablecoin issuers to park large portions of their reserves at the central bank and hold the rest in high-quality liquid securities such as UK government bonds. Law firms and potential issuers argue that such a structure would significantly compress margins and make UK stablecoin issuance far less attractive than operating under the United States or European Union regimes. The shift in tone highlights how UK policymakers are still feeling their way toward a middle ground on stablecoins as global approaches diverge. In January, UK lawmakers opened an inquiry into how best to oversee fiat-backed tokens, taking evidence from industry participants such as Coinbase and Innovate Finance, while the BoE and Treasury continue to refine a framework intended to sit alongside broader crypto rules and potential digital pound plans. A more flexible approach to caps and backing requirements could determine whether systemic GBP stablecoins emerge as serious competitors to dollar-pegged rivals in cross-border payments and onshore crypto markets, or whether activity remains concentrated in jurisdictions seen as more accommodating. Magazine: Singapore isn’t a ‘crypto hub’ — it’s something better: StraitsX CEO More on the subject

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