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 intensifies.
Bloomberg 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 settlement.
The 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 stablecoins. Market participants argue that Britain’s tougher posture could divert liquidity and innovation to New York instead of London.
At the heart of the debate are ownership caps the Bank of England and the Financial Conduct Authority have floated. Officials 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 money. He 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 system.
The shift matters because stablecoins are increasingly seen by banks and fintech firms as a faster, cheaper alternative to traditional payment rails.
Bloomberg Intelligence estimates they could be used for more than $50 trillion in payments by 2030. Global circulation already exceeds $300b, but sterling-pegged tokens remain negligible at just $581,000, compared with $468m in euro-linked stablecoins, according to DefiLlama data.
Industry executives say this imbalance shows the UK is falling behind.
Industry Pressure Prompts Softer Approach To Stablecoin Regulation In Britain
The Bank of England has acknowledged the pushback and is revising earlier plans. Officials are reportedly considering allowing systemic stablecoins to back some of their reserves with high-quality assets such as short-term government bonds. That would bring the rules closer to frameworks in the US and EU, easing some of the industry’s concerns.
The Digital Securities Sandbox will also play a role in shaping the final approach. The 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 rules.
Stablecoins 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 faster. For the Bank of England, carving out exemptions may be the first step in balancing oversight with innovation.
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