Bank of England set to ease sterling stablecoin rules amid industry concerns: FT

The Bank of England is set to ease its proposed restrictions on sterling stablecoins, with its deputy governor saying the draft framework may have been “overly conservative” amid growing competition from the U.S., according to the Financial Times.

BoE Deputy Governor Sarah Breeden told the FT on Thursday that the central bank is “looking very hard” at alternatives to its proposed approach for regulating stablecoins.

The central bank launched a consultation in November on a framework for “systemic” sterling stablecoins that would impose holding caps and reserve requirements. Under the proposal, individuals would be limited to owning up to £20,000 ($27,000), while businesses would face a £10 million ($13.5 million) cap.

The planned regime would also require systemic stablecoin issuers to place at least 40% of reserves at the BoE without earning interest, with the remainder invested in short-term UK government debt or other liquid assets. Non-sterling stablecoins and those primarily used for crypto trading, such as USDT and USDC, would remain under Financial Conduct Authority oversight.

Following industry pushback, the BoE is now reportedly reconsidering parts of the proposal.

“What we have heard from industry is that the way we have proposed to implement limits is cumbersome operationally for a temporary measure,” said Breeden, according to the report. “So we are genuinely open to thinking whether there are other ways of achieving our objective.”

The BoE is also considering lowering the proposed 40% reserve requirement, which was initially designed based on lessons from past crises. Breeden said that industry participants “would prefer to hold more interest-earning assets, as that goes to their bottom line,” adding that the central bank would “look hard to see if we have been overly conservative in our thinking there.”

The central bank is expected to publish updated draft rules before the end of June, with a final framework expected later this year.

The Block has reached out to the BoE for further information.

US stablecoin push

The reassessment comes as the U.S. continues its push for more clarity on stablecoin regulation. The GENIUS Act, signed into law in July by President Donald Trump, requires issuers to maintain full reserve backing and provide monthly disclosures. Meanwhile, the Senate Banking Committee is scheduled to mark up the broader Clarity Act crypto market structure legislation on Thursday.

Last week, Bank of England Governor Andrew Bailey also warned that international regulators could face a “coming wrestle” with the U.S. government over stablecoin standards.

“If we want stablecoins to be part of the architecture of payments globally … they’re only going to work if we have international standards,” Bailey said last Friday at a BoE-hosted conference, according to Reuters.

The UK’s planned framework has faced pushback from the crypto industry. In March, Tom Duff Gordon, then Coinbase’s vice president for international policy, told the House of Lords Financial Services Regulation Committee that the central bank’s holding limits would prevent sterling stablecoins from scaling into meaningful settlement infrastructure for tokenized markets.

Meanwhile, George Morris, digital assets partner at law firm Simmons & Simmons, told The Block that he welcomed the potential changes, saying they could help the UK remain competitive against other jurisdictions, where dollar-backed stablecoins currently dominate liquidity.

However, Morris warned that broader Treasury and FCA proposals could still create major obstacles for adoption, arguing that merchants integrating payment layers for non-UK stablecoins may ultimately need full FCA authorization — an approach he described as “entirely unworkable.”

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