The Bank of England is preparing to ease parts of its draft rules for sterling stablecoins. Deputy Governor Sarah Breeden said the earlier framework may have been too cautious as the UK faces stronger stablecoin competition from the United States.
According to the Financial Times report, Breeden said officials are reviewing whether temporary holding limits remain necessary. The central bank is also assessing whether planned reserve rules would create excessive pressure for issuers.
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Sterling Stablecoins Rules Target Holdings and Reserves
The measures were part of the Bank of England’s consultation paper for November 2025. The proposal would have limited most individuals to only £20,000 in a single UK stablecoin during the transition period.
Corporate users would have faced a separate cap of about $13.5 million. The limits were intended to curb the risk of deposits flowing rapidly out of the commercial banks, officials said.
The Bank of England also suggested tough reserve requirements for sterling stablecoins. Issuers would have been required to keep at least 40% of their reserves in non-interest-bearing deposits at the central bank.
The rest of the reserves would have been invested in short-term UK government debt. The model was designed to facilitate redemptions and mitigate risks associated with payment activity.
Both components of the proposal were opposed by industry groups. They said holding limits would be difficult to enforce across wallets, exchanges, and other digital asset platforms.
Potential issuers and legal advisers also raised concerns about business viability. They noted that large non-interest-bearing deposits at the Bank of England might diminish interest in the UK-issued tokens.
The latest review suggests that officials may change the framework before final rules are issued. Any changes may impact the viability of using stablecoins for settlement and payments.
The international pressure is also having an impact on the debate. UK officials have raised concerns that if regulations are too strict, sterling stablecoins activity could move to jurisdictions with more flexible regulation.
BoE Governor Calls for Global Stablecoin Standards
Bank of England Governor Andrew Bailey also said that the bank’s officials may have to hold difficult conversations with Washington. At a conference cited by Reuters, he stated that there needed to be common international standards for payment use cases all over the world.
Chair of the Financial Stability Board, Bailey, also raised concerns regarding redemption risks. He added that during times of stress on the markets, some stablecoins might be put to the test.
His comments coincide with the Trump administration’s push for the growth of stablecoins through the GENIUS Act. Reuters reported that the global stablecoin market had reached $317 billion.
Dollar-backed tokens still dominate the market, while sterling stablecoins remain a small segment. This has put pressure on the UK authorities to strike a balance between financial security and commercial interest.
The Bank of England has not yet finalized the rules. The easing of reserve requirements or holding limits could impact how sterling stablecoins are used in payments, treasury management, and settlement in the future.
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