The Bank of England (BoE) announced on Tuesday that it is considering an alternative approach to regulating stablecoins in the United Kingdom. The move comes after the central bank’s initial proposal to cap the amount of digital holdings that individuals and businesses can hold received heavy criticism from the global crypto industry.
Speaking at the CityWeek 2026 conference, Deputy Governor Sarah Breeden suggested a cap on the total amount of currency issued as a more practical alternative. This approach is seen as more effective in protecting the traditional banking sector from the risk of a massive deposit outflow without aggressively stifling financial innovation.
Previously, the BoE had planned to set a strict holding limit of £20,000 for individuals and £10 million for corporate entities to avoid a credit crunch. However, the plan was opposed by large firms such as Coinbase, which described the UK’s regulations as the most conservative and risked undermining competitiveness.
The BoE’s change of direction is also influenced by political developments in the United States, under President Donald Trump’s pro-crypto administration through legislation such as the GENIUS Act. This global competition is forcing UK policymakers to align their regulatory timelines with the US to prevent the movement of digital capital overseas.
The new, more market-friendly draft regulations are due to be published next month with a target of full implementation by the end of 2026. The BoE is also allowing traditional banks to issue their own stablecoins, provided they are managed by a separate non-deposit-taking entity using a special brand that distinguishes them from regular retail deposits.
