The Bank of England is reviewing its stablecoin regulatory caps and reserve requirements after industry pressure labeled the current framework 'overly conservative,' sources close to the process confirmed. The central bank aims to prevent domestic stablecoin issuers from relocating to more permissive jurisdictions. The review is still in early stages, and no formal proposals have been published yet.
Why the review is happening
Stablecoin firms have been pushing back against the BoE's proposed rules for months. Industry participants argue that the caps on issuance and the strict reserve asset requirements make the UK less competitive than the European Union or Singapore. Some issuers have already threatened to move operations abroad if the rules aren't eased. The BoE's move signals it's listening — and worried about losing the country's edge in digital finance.
The UK government has repeatedly said it wants London to remain a global hub for crypto and fintech. But stablecoin companies say the current draft regulations would stifle innovation and push talent elsewhere. The review is a direct response to that tension.
What's being reconsidered
At the heart of the review are two specific elements: the limit on the total value of stablecoins a single issuer can put into circulation, and the composition of reserve assets backing those tokens. Under the original proposals, issuers would have faced tight caps and a narrow list of permissible reserve assets — mostly cash and short-dated government bonds. Critics said those requirements would make it impossible to scale a stablecoin business profitably in the UK.
The BoE hasn't said exactly what changes it's considering, but industry observers expect the central bank to raise the cap and broaden the reserve asset categories to include high-quality corporate debt or even tokenized money-market funds. The goal is to strike a balance between consumer protection and commercial viability.
The wider regulatory landscape
The UK isn't acting in a vacuum. The European Union's Markets in Crypto-Assets (MiCA) regulation, which came into force this year, offers a clearer and arguably more flexible path for stablecoin issuers. In the United States, lawmakers are still debating federal stablecoin legislation, but states like New York and Wyoming have already attracted major players. Singapore's Monetary Authority has also carved out a tailored regime that allows for innovation within guardrails.
If the BoE doesn't adjust its approach, the risk is that issuers simply register elsewhere and serve UK customers from abroad — a regulatory arbitrage the central bank wants to avoid. That's why the review is seen as a necessary course correction, not a wholesale retreat from oversight.
The review is ongoing, and no deadline has been set for new rules. Industry participants are watching closely, hoping the BoE will publish revised proposals before the end of the year. Until then, the question remains: will the changes be enough to keep stablecoin issuers in Britain?
