The Bank of England signaled that it may take a more flexible approach to systemic stablecoins, even as it criticized the quality of industry feedback it has received so far. The message from Deputy Governor Sarah Breeden was that the Bank is open to changing its framework, but not without more practical input from the market.
That matters because the policy process is moving into a decisive phase. With draft rules scheduled for a new consultation in June 2026, firms now face a limited window to influence how the UK will regulate stablecoins with systemic reach.
A Softer Tone, but Not a Softer View of Risk
Breeden described the Bank’s stance as an effort to balance choice in what she called a “multi-moneyverse” with the need to protect financial stability. The Bank is not stepping back from regulation, but it is signaling that some of its original proposals may be adjusted if better alternatives are put forward.
The initial framework was built around concerns the Bank considers serious, especially the possibility that deposits could move rapidly from traditional banks into non-bank digital money. That concern remains central to the Bank’s thinking and continues to shape its approach to reserve rules, liquidity tools, and user limits.
Among the measures outlined during the consultation were a requirement that 40% of backing assets be held as unremunerated central bank deposits, proposed holding caps of £20,000 for individuals and £10,000,000 for businesses, and contingency liquidity arrangements for systemic issuers in times of market stress. Those proposals show that the Bank’s starting point was a highly controlled model designed to contain run risk and operational instability.
Industry Pushback Has Focused on Viability
The industry response has been forceful. Firms have argued that the proposed rules are too restrictive, especially the 40% unremunerated deposit requirement and the strict holding limits, which they say would damage commercial viability and slow adoption.
Many participants have instead called for a more proportionate and principles-based regime centered on reserve transparency, custody standards, and consumer protection rather than something closer to bank-style prudential regulation. The core industry argument is that stablecoin oversight should reflect the actual design of the product, not simply impose a banking template on new forms of digital money.
The Bank, however, has made clear that it is not satisfied with the level of detail in many of those responses. Breeden said too many submissions criticized the proposals without offering workable alternatives that could still address financial stability and consumer protection risks.
That tension is now unfolding under greater political attention as well. Parliamentary scrutiny has increased through the Financial Services Regulation Committee’s inquiry into how stablecoins could affect the statutory objectives of the Bank, the PRA, and the FCA.
Reserve composition, holding limits, custody requirements, liquidity planning, auditability, and disclosure standards all remain live issues that could materially shape whether domestic issuance is commercially attractive.
International comparisons will also matter as the Bank refines its approach. The UK framework will be judged against developments such as MiCA in the European Union and prior Basel guidance, which means firms now need to decide whether to submit detailed alternatives or prepare for a more prescriptive final regime.