The Bank of England (BOE) has released a new consultation paper outlining its updated regulatory approach to stablecoins, following input from 46 stakeholders—including major banks and payment service providers. Published on November 10, the proposal addresses concerns from an earlier discussion paper that many believed would hinder growth in the UK’s digital asset sector. Although some of the original strict requirements have been softened, industry analysts, including Agant’s Tom Rhodes, argue that the BOE is still being excessively cautious in its approach.
Limits on Systemic Retail Stablecoins
A major update in the proposal is the introduction of holding caps for what the BOE classifies as “systemic retail stablecoins.” Under the new framework, individuals would be limited to £20,000 per stablecoin issuer, while businesses could hold up to £10 million. The BOE says these restrictions are aimed at preventing financial instability, but critics—such as crypto commentator Aleksandra Huk—question whether the institution has the authority to enforce such limits. Importantly, the proposal focuses only on sterling-backed stablecoins, leaving popular tokens like USDT and USDC outside the scope of these rules.
Calls for Clarity and a More Competitive UK Crypto Sector
Industry representatives are urging the BOE to define more clearly what constitutes a systemic risk, arguing that vague criteria could create uncertainty for issuers and investors alike. Despite limited regulatory progress since conversations began in 2017, stakeholders are hopeful that the ongoing refinement of the UK’s stablecoin framework will ultimately foster a more competitive and innovation-friendly environment. As the BOE continues to refine its approach, many in the crypto sector are watching closely, anticipating clearer guidance and a more supportive climate for digital asset adoption in the UK.
