The Bank of England is backing away from proposed ownership caps on stablecoins, responding to fierce industry criticism that the original rules were too restrictive. Deputy Governor Sarah Breeden, who oversees financial stability, signaled the retreat on Wednesday, saying the central bank now believes its initial framework may have gone too far.
Why the limits drew fire
The earlier draft would have placed tight ownership restrictions on firms issuing digital currencies pegged to fiat. Industry groups argued the constraints would stifle innovation and make it unworkable for companies to build viable stablecoin businesses inside the UK. The pushback was broad and loud, with several major crypto firms and trade associations filing detailed objections during the consultation period.
Breeden's signal
Breeden didn't announce a specific new cap or timeline. Instead, she told an audience at a financial technology conference that the Bank had heard the complaints and was adjusting its approach. “We recognise that some of our earlier proposals may have been overly restrictive,” she said, according to prepared remarks. “We are now scaling back the proposed ownership limits to strike a more balanced regulatory footing.” The Bank stopped short of saying how far it would roll back the thresholds, leaving market participants guessing.
What the revision means for stablecoin issuers
For companies already building stablecoin projects in the UK, the retreat is a welcome if cautious signal. The original cap would have limited how much of a stablecoin issuer could be owned by a single entity or group, a measure the Bank said was needed to prevent concentration risk. Critics countered that the rule would make it impossible for startups to attract venture funding or for established payment firms to launch new products. The revised framework is expected to allow more concentrated ownership while still preserving the Bank's ability to step in if a stablecoin grows too big to fail.
The shift also aligns the UK more closely with other jurisdictions. The European Union's Markets in Crypto-Assets regulation, which takes full effect this year, does not impose a hard ownership limit. The US is still drafting its stablecoin rules, with a bill moving through Congress that would require issuers to hold high-quality reserves but stops short of capping ownership.
What comes next
The Bank of England is expected to publish a revised consultation paper in the coming months. Industry participants will then have a chance to respond to the updated proposals before final rules are laid down. The key unanswered question remains exactly where the new ownership ceiling will land—and whether it will be generous enough to satisfy the firms that threatened to take their projects elsewhere.
