Bank of England reconsiders stablecoin holding caps

The Bank of England is reconsidering proposed limits on holdings of sterling-backed stablecoins and related reserve requirements following concerns raised by digital asset firms that the rules could hinder adoption and competitiveness.

Deputy Governor for Financial Stability Sarah Breeden indicated the central bank is exploring alternatives to temporary caps outlined in its November 2025 consultation paper. Those proposals would have restricted individuals to holding up to 20,000 pounds of a single UK stablecoin and businesses to around 10 million pounds during an initial transition period. Officials designed the limits to prevent rapid shifts of deposits from commercial banks into tokenized money, which could strain financial stability if stablecoins gained sudden traction for payments.

The consultation also called for issuers to hold at least 40 percent of reserves in non-interest-bearing deposits at the Bank of England, with the remainder in high-quality liquid assets such as UK government bonds. Breeden, who has advocated caution on stablecoins as money-like instruments, told the Financial Times the bank is assessing whether these measures are overly conservative. She noted...