Bank of England Plans Exemptions On Proposed Stablecoin Holding Caps

The Bank of England is preparing to allow exemptions to proposed limits on stablecoin holdings, a move that signals a more flexible stance on digital assets as global competition ￰1￱ reported Tuesday that the UK’s Bank of England plans to grant waivers to certain firms, such as crypto exchanges that may need to hold large amounts of stablecoins for liquidity and ￰2￱ bank also intends to permit the use of stablecoins as settlement assets in its Digital Securities Sandbox, offering a controlled environment for testing blockchain-based issuance and trading. Britain’s Tougher Stance On Stablecoins Contrasts With US Rules The decision comes as industry voices raise concerns that the UK risks losing ground to the US , where the Trump administration’s GENIUS Act has already established rules around dollar-backed ￰3￱ participants argue that Britain’s tougher posture could divert liquidity and innovation to New York instead of ￰4￱ Bank of England plans to grant exemptions to proposed limits on stablecoin holdings by businesses, indicating a softening stance toward cryptoassets amid growing competition from the US ￰0￱ — Bloomberg (@business) October 7, 2025 At the heart of the debate are ownership caps the Bank of England and the Financial Conduct Authority have ￰5￱ suggested limits of up to £20,000 for individuals and £10m for businesses on systemic stablecoins, those widely used for payments.

A consultation paper expected by the end of the year will detail the proposed rules. Bailey’s Recent Comments Mark Shift From Earlier Skepticism Toward Stablecoins Governor Andrew Bailey has long been skeptical of stablecoins, warning earlier this year that they could erode public trust in ￰6￱ has spoken more favorably about tokenized bank deposits as a safer path. Yet, in recent weeks, Bailey has acknowledged that stablecoins may drive innovation and could co-exist with the traditional financial ￰7￱ shift matters because stablecoins are increasingly seen by banks and fintech firms as a faster, cheaper alternative to traditional payment ￰8￱ Intelligence estimates they could be used for more than $50 trillion in payments by ￰9￱ circulation already exceeds $300b, but sterling-pegged tokens remain negligible at just $581,000, compared with $468m in euro-linked stablecoins, according to DefiLlama ￰10￱ executives say this imbalance shows the UK is falling ￰11￱ Pressure Prompts Softer Approach To Stablecoin Regulation In Britain The Bank of England has acknowledged the pushback and is revising earlier ￰12￱ are reportedly considering allowing systemic stablecoins to back some of their reserves with high-quality assets such as short-term government ￰13￱ would bring the rules closer to frameworks in the US and EU, easing some of the industry’s ￰14￱ Digital Securities Sandbox will also play a role in shaping the final ￰15￱ pilot environment will permit firms to use regulated stablecoins tied to non-sterling currencies for settlement, giving regulators a chance to study their effectiveness in real-world use cases before finalizing wholesale ￰16￱ remain a small part of the UK market today, but their rapid global growth and the competition from overseas frameworks are forcing regulators to move ￰17￱ the Bank of England, carving out exemptions may be the first step in balancing oversight with innovation.