The Bank of England (BoE) is reconsidering its plan to implement holding limits on stablecoins following backlash from industry groups who argue that such restrictions could reflect an unwelcoming stance toward cryptocurrency and hinder innovation.

During a session with the House of Lords Financial Services Regulation Committee, Deputy Governor Sarah Breeden expressed the bank’s openness to exploring alternative methods to mitigate risks associated with stablecoins, instead of imposing strict limits. She stated the proposed limits aimed to prevent a significant shift of deposits from existing banks to stablecoins, which could potentially disrupt lending and credit accessibility for both individuals and businesses.

“We are genuinely open to other ways of achieving the objective. I think you’ve heard from other people as part of your inquiry that this risk to the provision of credit is real.”
Translation: We are genuinely open to other methods to achieve our goal. This risk to lending is substantial.

Breeden emphasized the need to consider industry feedback on these proposed measures. She highlighted the necessity of ensuring that the financial stability authority takes steps to avoid a sudden decrease in credit availability in the UK market.

Industry advocates have pushed back against the proposed holding limits, which were suggested to range from £10,000 to £20,000 ($13,368 to $26,733), arguing that such caps could drive operations overseas and stifle economic growth.

Self-Custody Wallets Not Allowed

Last November, the BoE released a consultation paper detailing a regulatory framework intended for systemic stablecoins pegged to the sterling, which welcomed public input until February 10. The BoE also indicated that it would closely monitor the risks of unhosted wallets, which may not be well regulated.

Breeden made it clear that self-custody wallets designed for stablecoin storage would not fall under the UK’s regulatory framework, stating that individuals holding stablecoins in unregulated wallets would not receive protections.

Future of Sterling Stablecoin Applications

Looking ahead, the Financial Conduct Authority (FCA) plans to create a regulatory sandbox for businesses to pilot stablecoin products and services starting in the first quarter of 2026. Although regulations are still being finalized, applications for launching new stablecoins are set to begin before the end of 2026.

Breeden reassured stakeholders that the UK would not be lagging in this regard, stating, “We will be welcoming applications from stablecoin issuers by the end of this year.”

“On the substance of our regime, the guiding principle is that a stablecoin used as money in the economy should be as robust as the money we use today issued by banks.”
Translation: Our fundamental principle is that a stablecoin must be as reliable as current bank-issued money.

Related: Stablecoin inflows rebound to $1.7B as Washington battles over yield rules.

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