The Bank of England has softened its proposed approach to regulating stablecoins, abandoning plans to cap the amount individuals and businesses could hold after criticism from politicians and the cryptocurrency industry.
The central bank had previously proposed limiting stablecoin holdings to £20,000 for individuals and £10 million for businesses. However, it has now dropped those restrictions and instead plans to impose a £40 billion cap on the amount any single issuer can have in circulation.
The move follows criticism from Reform UK leader Nigel Farage, who argued that the original proposals risked undermining Britain’s competitiveness in the rapidly growing digital asset sector. Farage described the plans as an example of “unelected bureaucrats” stifling innovation and warned they could weaken London’s position as a global financial centre.
Stablecoins are digital assets designed to maintain a fixed value by being linked to traditional currencies such as the US dollar or pound sterling. Unlike more volatile cryptocurrencies such as Bitcoin, they are intended to provide the efficiency and lower transaction costs associated with digital assets while maintaining price stability.
The Bank of England’s revised framework seeks to balance innovation with financial stability concerns. Policymakers have previously warned that widespread adoption of stablecoins could affect monetary policy transmission and potentially encourage deposits to move away from traditional banks.
Deputy Governor for Financial Stability Sarah Breeden described the revised approach as a significant step towards creating a trusted regulatory framework for digital payments. She said the new regime would support innovation while ensuring robust protections, prompt redemption rights and appropriate central bank oversight.
The cryptocurrency industry broadly welcomed the decision. Industry body CryptoUK said the changes represent a more practical balance between supporting innovation and maintaining financial stability.
The Bank expects stablecoins to enter a formal regulatory regime from next year, providing greater clarity for issuers and users while establishing the UK as one of the first major jurisdictions to implement a comprehensive framework for the sector.
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