Bank of England reviews strict stablecoin limits after criticism, as Deputy Governor Sarah Breeden signals flexible rules for future digital payment systems.
The Bank of England is changing its stance on stablecoins after strong criticism from the crypto industry. The central bank earlier came up with stringent rules for stablecoins. However, officials say now that they might make changes to the plan. Deputy Governor Sarah Breeden, speaking to the House of Lords, said that the bank has an open mind to new ideas.
Bank Of England Reviews Strict Stablecoin Limits After Industry Backlash
Last year, the Bank of England proposed rules for the sterling-based stablecoins. These tokens may be popularly used for payments on a daily basis in the future. Therefore, the bank wanted limits so as to reduce financial risk. The rules would protect banks and the broader economy, officials said.
🚨BULLISH: BANK OF ENGLAND BECOMING "FRIENDLY" TO STABLECOINS
Famously a jurisdiction very skeptical of blockchain, The UK's Bank of England is "evolving to a more friendly stance", per a Cointelegraph report.
When the BOE shared its vision for stablecoin regulation last year,… pic.twitter.com/IMzJRSkG6l
— BSCN (@BSCNews) March 14, 2026
Under the proposal, people could only hold $20,000 worth of stablecoins. Businesses would be capped at the amount of GBP10 million. In addition, the bank proposed strict rules for backing stablecoin reserves. About 40% of assets would have to remain in central bank deposits.
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These limits would stop the sudden withdrawal of money from banks, the bank said. If many people shifted funds into stablecoins, banks may lose deposits rapidly. Given that the UK economy is highly reliant on bank lending, such outflows could create problems. Therefore, the bank took a risk-averse approach.
However, the plan was heavily criticized by crypto companies and financial groups. Many firms said the limits were too high. They said the rules could delay innovation in digital payments. Some industry leaders also said that the asset backing rules were too conservative.
Deputy Governor Signals Flexible Approach to Future Stablecoin Rules
Deputy Governor Sarah Breeden said the bank recognises the concerns. She explained that the holding limits were just one possible solution. Therefore, the Bank of England is willing to consider other risk management methods. She requested the industry to make constructive suggestions.
Breeden told lawmakers that stablecoins may grow rapidly in the future. Because of this, regulators need to prepare the rules beforehand, which need to be safe. However, she also added that the bank does not want to block new technology. Instead, the aim is to find a balance between innovation and financial stability.
There is also a review into the asset-backing requirement by the central bank. Earlier proposals called for a 60:40 structuring of reserve assets. Critics claimed that this rule may make stablecoins harder to use. Now the bank is researching to find out if a different model would work better.
Officials are planning to revise the rules sometime after the consultation ends, around June. The new framework may provide more flexibility for companies. If the bank becomes less strict on the limits, the UK could be friendlier to blockchain payments.
This advancement provides evidence of the Bank of England’s move to a more open stance. After years of caution, regulators have now come round to the view that stablecoins are likely to play a big role in future finance.
