BoE Opens Door to Revising Limits on “Systemic” Sterling Stablecoins - Crypto Economy

TL;DR

• The Bank of England signaled it is open to revising proposed limits on systemic sterling stablecoins after industry criticism of its original framework.
• Current proposals require 40% of backing assets at the BoE, allow 60% in UK government debt, and cap holdings for businesses and individuals.
• Sarah Breeden said officials remain open to alternatives, may review the 60:40 split, and plan to publish draft rules in June.

Britain’s stablecoin debate is entering a more fluid phase, and the Bank of England is no longer presenting its initial caps as untouchable. Sarah Breeden, the central bank’s deputy governor for financial stability, said the BoE is genuinely open to changing parts of its proposed regime for “systemic” sterling stablecoins after industry criticism. The shift matters because the original framework landed as one of the stricter models under discussion, combining backing requirements with temporary holding limits intended to prevent a sudden migration of deposits from banks into privately issued digital pounds across UK payment systems.

Pressure builds around the BoE’s proposed safeguards

At the center of the dispute is a regulatory model that many firms see as too restrictive for a market still trying to form. Under the November consultation, issuers of systemic sterling stablecoins would need to hold 40% of backing assets as unremunerated deposits at the Bank of England, with up to 60% in short-term UK government debt. The BoE also proposed temporary holding limits of £20,000 for individuals and £10 million for businesses, with exemptions for the largest firms, arguing the measures would protect credit creation during a transition period for banks and households.


Breeden’s remarks made clear that the central bank is defending its objective more firmly than its exact mechanics. Appearing before a House of Lords committee, she said policymakers remain open to other approaches if those alternatives can protect financial stability without relying on temporary holding caps. At the same time, she expressed disappointment that critics had largely objected to the plan without offering a workable replacement. She also said the BoE would review whether the 60:40 asset split is overly conservative, a notable signal that even the reserve structure itself may no longer be fixed.

That flexibility arrives against a market whose future in Britain is far from settled. Breeden said sterling stablecoins remain a tiny part of the sector and that it is unclear whether they will gain traction in the UK at all. Questions remain over scalability, customer demand, and whether tokenized commercial bank deposits may prove more suitable than stablecoins for payments. Even so, the Bank is moving ahead. Breeden said draft rules will be published for consultation in June. For the industry, that means the argument is no longer frozen, but it is not finished either.