Consultation Will Set Out Holding Limits
The Bank of England will publish its long-awaited consultation paper on stablecoin regulation on Nov. 10, Bloomberg reported, citing Deputy Governor Sarah Breeden. The proposals will include temporary caps on holdings, with limits of up to £20,000 ($26,000) for individuals and £10 million for businesses. Breeden said the measures are intended to prevent sudden outflows from the banking system as stablecoins enter mainstream use. The limits reflect Britain’s reliance on a bank-funded mortgage market, which regulators say could face liquidity stress if deposits shift quickly into digital assets. “Our aim is to make sure that our regime is up and running, just as quickly as the U.S.,” Breeden told Bloomberg, rejecting claims that the UK is falling behind Washington’s efforts to formalize oversight of dollar-backed tokens.
The Bank of England’s move sets clear limits on stablecoin use while signaling readiness to compete with U.S. regulators in building a formal digital asset framework.
Focus on ‘Systemic’ Stablecoins
The new regime will initially apply to systemic stablecoins — tokens deemed likely to play a significant role in retail or institutional payments. Smaller issuers will continue under the Financial Conduct Authority’s supervision, subject to lighter requirements. Reuters reported that the consultation aims to align the UK’s rules with global standards while allowing time for infrastructure and oversight mechanisms to develop. Under the proposed framework, issuers will need to maintain high-quality reserves and demonstrate compliance with existing payment and settlement rules. Breeden said the structure ensures that the Bank of England can manage risks tied to stablecoins used at scale, while the FCA continues to oversee non-systemic tokens and wallet providers.
Competitive Pressure from the U.S.
The consultation follows growing concern that the UK could lose ground to the United States, where federal regulators have advanced frameworks for dollar-backed tokens under the GENIUS Act. Breeden said the UK’s timeline puts it “on track” to keep pace with global developments. The Treasury and the Bank of England have both framed stablecoins as part of a broader effort to modernize Britain’s financial infrastructure, positioning them as regulated payment instruments rather than speculative assets. Breeden said the goal is to ensure public confidence in digital settlement systems that may operate alongside cash and bank deposits.
Caps on stablecoin holdings could limit near-term growth but provide clarity for banks and payment firms planning integration of tokenized settlement.
Part of a Wider Digital Finance Push
The UK government has moved to accelerate financial innovation after years of slow progress in crypto regulation. Last month, officials said they would appoint a “digital markets champion” to oversee blockchain adoption across wholesale financial markets. The Financial Conduct Authority also lifted its four-year ban on crypto exchange-traded notes, opening the door for retail investors to gain exposure to digital assets through regulated instruments. The stablecoin consultation marks the final step before legislation can be implemented in 2026, giving banks, payment firms, and fintechs a roadmap for issuing or integrating digital tokens into existing infrastructure. Breeden said the Bank would continue to work closely with the Treasury and the FCA to coordinate implementation and ensure that oversight frameworks remain aligned with international standards.