The Bank of England is rethinking its approach to stablecoin regulation, moving away from individual holding limits toward a system of total supply caps. Deputy Governor Sarah Breeden, speaking at CityWeek 2026, signaled that the central bank is considering temporary guardrails on the overall issuance of stablecoins, a policy shift from its November 2024 proposal that would have capped personal holdings at £20,000 and corporate holdings at £10 million.
The earlier plan drew sharp criticism from crypto firms, who argued the restrictions were among the world's toughest and would stifle innovation. Now, the BoE aims to balance financial stability with a more cost-effective framework that could unlock high-value corporate settlements and other large-scale payment uses. Breeden emphasized that temporary issuance controls may be more effective than per-user limits while reducing compliance burdens for the sector.
The central bank expects to release draft rules next month, with a final framework targeted by the end of 2026. Breeden noted that the timeline is aligned with U.S. regulatory developments, signaling a coordinated international stance. In another notable change, the BoE said banks will be permitted to issue stablecoins through non-deposit-taking entities with distinct branding, keeping a clear separation from traditional banking.
This strategic pivot indicates that UK regulators are listening to industry feedback while maintaining their core objective of preventing systemic risks from unfettered stablecoin growth. The coming rules are likely to set an important precedent for stablecoin oversight in major economies.
