The Bank of England’s (BOE) position on stablecoins is evolving into a more friendly one, but constructive dialogue with the industry is still lacking, according to the bank’s deputy governor.
The UK’s central bank launched a stablecoin consultation in November last year. Some of the proposed requirements have sparked the ire of cryptocurrency industry representatives, who argue that they could stifle innovation.
Over the past few months, the bank has been working with industry groups to develop its stance on stablecoins. These include reviewing corroboration requirements and reconsidering account limits.
Some industry observers believe banks are ramping up their business with stablecoins, but there is still work to be done.
Bank of England welcomes feedback on stablecoin risks
On November 10, 2025, the BOE released a document outlining its vision for a stablecoin regulatory regime. According to the bank, this comes two years after the first discussion paper included perspectives from “banks, non-bank payment service providers, payment system operators, industry associations, academia and individuals.”
At the time, industry insiders told Cointelegraph that the BOE was exaggerating the perceived risk that stablecoins posed to the UK economy. Tom Rose, chief legal officer at UK-based stablecoin issuer Agant, said at the time that the bank had been “disproportionately cautious and restrictive.”
One of the more controversial measures was the holding limit on stablecoins, with a limit of £20,000 for individuals and £10 million for businesses accepting stablecoins as a means of payment.
Well, it looks like the bank is coming. BOE Deputy Governor Sarah Breeden told MPs on Wednesday in the House of Lords Financial Services Regulation Committee that she was open to revisiting these restrictions.
Breeden said the proposed limits are meant to reduce the risk of large-scale migration of deposits to stablecoins, which could destabilize banks.
“We have proposed keeping the restrictions in place as a way to manage that risk and welcome feedback on other ways to achieve that,” she said.
But feedback itself appears to be a problem, at least according to Breeden. She said, “The pressure from the industry to do things differently is very real. What we’re a little disappointed about is that no one said, ‘Why don’t we do it this way?'”
“I don’t think we’ve yet had the kind of constructive engagement that I would have liked to have about different ways to solve the problem. Instead, what we have is, ‘Please don’t do this,’ and ‘I understand why you want to do something,’ rather than bridging the gap.”
Rose told Cointelegraph on Thursday that this is not necessarily the case. “Over the past two years, we have considered thousands of pages of consultation from the FCA and banks, attended numerous roundtable discussions and submitted hundreds of pages of submissions on our own and as part of industry bodies.”
He said the main challenge for the industry and regulators was to create a “comprehensive regulatory regime for a market that is still underdeveloped.”
Rose explained:
“It is impossible to provide concrete data in these circumstances, which is why a regime based on lighter touch principles is appropriate at this early stage.”
Nick Jones, founder and CEO of UK-based digital asset platform Zumo, said: “Industry bodies have been working hard, meeting deadlines, to make concrete recommendations.”
He said feedback could be more constructive if the bank followed the Financial Conduct Authority’s spring model. These timed workshops focus on practical applications of technology to answer regulatory questions.
“Multi-Moneyverse” and the future of UK stablecoins
Breeden began by asserting that as a bank, “we want non-banks to issue tokenized money.”
“Today we can achieve what I call a ‘multi-moneyverse’ with more choice and competition.”
In a speech in September, he said such a system would be “characterized by the ability to choose between different forms of money and payments; technology would drive faster, cheaper and more innovative payments for the benefit of businesses, households and financial market users; and, importantly, the whole system would be underpinned by trust in money itself.”
Competition between currencies and its supposed benefits has become a central debate in the crypto industry. “For stablecoins to become part of a competitive multi-moneyverse represents a substantial and positive evolution in the Bank’s thinking,” Rose said.
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But Rose noted that this is in “a marked contrast” to BOE Governor Andrew Bailey’s statement that “he does not see stablecoins as a replacement for commercial bank money.”
Mr Jones said: “Over time we have seen the Bank of England’s skepticism towards digital assets begin to dissipate.” It is “encouraging” that central banks are more receptive to competing forms of currency and that sterling-denominated stablecoins can coexist with fiat currencies.
“It is clear that different emerging types fit different use cases. For example, large institutional investors are accustomed to tokenized deposits, while smaller retail payment companies can leverage the network effects of stablecoins,” he said.
Rose said the next step is a final policy stance from the BOE, but revisions are still possible.
The industry is still pushing for an end to holding limits on issuers and an end to bank-like capital requirements. Jones said the latter is “unsuitable for fully supported issuers and should be replaced by oversight focused on reserve quality and transparency.”
It also calls for a review of reserves. So far, the BOE requires issuers to hold 40% of their reserve assets in unpaid Bank of England deposits and up to 60% in highly rated short-term UK government bonds.
This is based on past transactions such as the Silicon Valley Bank Failure in 2023, which resulted in the USDC stablecoin losing its peg. “These numbers are roughly in line with that, which is why we are proposing 40% rather than a lower number,” Breeden told Reuters.
“Perhaps the regulator should consider rewarding some of the 40% held by the Bank of England to maintain its commercial viability,” Jones said.
“The UK can become one of the leaders in stablecoins, but only if regulation is proportionate and competitive.”
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