BoE rethinks stablecoin limits as UK weighs competitiveness concerns

The Bank of England is reconsidering parts of its proposed stablecoin framework following industry criticism that the rules could hurt the UK's competitiveness in the digital asset economy, according to a Financial Times report. The report, published on 13 May, said the central bank is reviewing proposed limits on stablecoin holdings and reserve requirements after feedback from industry participants who argued that the framework risked becoming overly restrictive. The proposed rules originally formed part of the Bank of England's efforts to manage financial stability risks tied to the growth of stablecoins and digital payments infrastructure. However, the debate increasingly appears to center on whether tighter safeguards could discourage innovation and push activity toward other jurisdictions. BoE signals flexibility on earlier proposals According to the Financial Times report, Deputy Governor for Financial Stability Sarah Breeden indicated that the Bank is actively reassessing aspects of its earlier proposals. Among the measures under review is a proposed temporary cap that would limit individuals to holding up to £20,000 of a specific stablecoin. The report also said the Bank is reconsidering plans requiring stablecoin issuers to keep at least 40% of reserve assets deposited at the central bank without earning interest, while investing the remaining portion in short-term UK government debt. Breeden reportedly acknowledged that parts of the implementation framework may have created operational difficulties. Industry participants had argued that the proposed measures could make issuing stablecoins less economically attractive compared with frameworks emerging elsewhere. Stablecoin economics become part of the debate The reserve requirements drew particular attention because they directly affect how stablecoin issuers generate revenue. Issuers typically earn income from reserve assets backing their tokens, particularly through short-term government securities and other yield-generating instruments. Requiring a large percentage of reserves to remain idle at the central bank could reduce those returns and weaken incentives for firms building stablecoin products in the UK market. Some industry participants also argued that holding limits could restrict usage growth if stablecoins become more widely integrated into payments and financial services. UK joins broader race around digital finance rules The reported reassessment comes as several jurisdictions accelerate efforts to establish formal stablecoin frameworks. In the United States, lawmakers continue debating stablecoin legislation while banks and crypto firms increasingly position themselves around tokenized financial infrastructure and digital payment systems. The discussion increasingly extends beyond crypto adoption itself and into questions surrounding competitiveness, financial innovation, and the future structure of payment systems. Final Summary The Financial Times reported that the Bank of England is reconsidering stablecoin holding limits and reserve requirements after industry criticism. The debate highlights growing pressure on regulators to balance financial safeguards with digital economy competitiveness.