Bank of England Signals Openness to Stablecoin Regulation Despite Lack of Industry Input
The Bank of England (BoE) indicated on Thursday its willingness to revise the proposed regulatory framework for systemic sterling stablecoins, highlighting the need for better collaboration with industry stakeholders, as reported by Cointelegraph.
During a testimony before the Treasury Select Committee, Deputy Governor Sarah Breeden expressed disappointment regarding the insufficient feedback from the crypto industry, which has hindered the development of robust regulatory safeguards. The BoE had initiated a consultation process for regulatory frameworks in November 2025, aiming to balance innovation with consumer protection in an evolving financial landscape.
Redefining Regulatory Proposals
In its regulatory outline, the BoE suggested that individual holdings of systemic stablecoins be capped at £20,000, while business accounts could be limited to £10 million. However, Breeden noted that these caps might be reassessed in response to ongoing fintech criticism that they act as barriers to innovation.
These provisional limits are intended to minimize risks related to bank deposit outflows, with particular exemptions for wholesale transactions and large businesses. The proposed regulations mandate issuers to maintain at least 40% of the stablecoin value in BoE reserve accounts and up to 60% in short-term UK government debt.
Breeden framed the current feedback from the industry as insufficient, urging stakeholders to contribute constructively to the regulatory dialogue. With the consultation period running until February 10, 2026, the central bank expects full regulations to be established by the end of that year.
Industry Perspectives and Market Climate
Industry advocates, including those from major crypto firms such as Coinbase, have critiqued the proposed holding limits as “unworkable,” asserting they stifle growth and create competitive disadvantages compared to regulations in the US and EU. The Financial Conduct Authority (FCA) underscored its support for UK-issued stablecoins, planning to launch a regulatory sandbox for testing by January 2026, working closely with the BoE on the regulatory framework.
Breeden has hinted at a shift in the BoE’s stance towards a more flexible approach, particularly as the UK seeks to position itself as a global hub for cryptocurrency innovation. Serving as a response to the industry’s calls for elevated thresholds, these discussions could redefine the UK’s approach to crypto regulation.
What’s Next for UK Stablecoin Regulation?
As industry feedback improves, the framework could see modifications that better accommodate the needs of businesses and promote wider stablecoin adoption in the UK. Analysts believe a revised regulatory environment may enhance the country’s attractiveness to both domestic and international crypto firms, fostering innovation while ensuring financial stability.
With the FCA and BoE working in conjunction, a clearer regulatory landscape may emerge that balances innovation with consumer protection, potentially influencing the future of stablecoin regulations globally.
