Bank of England to ease stablecoin restrictions under industry pressure

The Bank of England is set to ease proposed restrictions on stablecoin holdings, marking a significant shift in its regulatory approach. Deputy Governor for Financial Stability Sarah Breeden indicated Thursday that the central bank's initial proposals were overly conservative, particularly regarding individual ownership limits. The BOE had proposed restricting individuals to holding up to 20,000 pounds ($27,000) per stablecoin, a measure that faced swift criticism from industry participants. The central bank is also prepared to reduce its requirement that at least 40% of stablecoin-backing assets be deposited with the BOE, earning no interest. These changes come after the digital asset industry warned that strict regulations could undermine the United Kingdom's competitiveness in the emerging digital economy. The industry argued that overly restrictive rules risked pushing innovation and capital to jurisdictions with more favorable regulatory frameworks. The BOE's willingness to reconsider its stance reflects growing recognition that regulatory frameworks must balance consumer protection with innovation incentives. Similar regulatory tensions exist globally, as seen in [INTERNAL: crypto regulation frameworks] discussions across major financial centers. The proposed modifications suggest the central bank is seeking a middle ground that preserves financial stability objectives while allowing market participation. The outcome could position the UK as a more competitive destination for stablecoin issuers and digital asset infrastructure providers seeking regulatory clarity without prohibitive restrictions.