The Bank of England has released its latest proposal outlining how stablecoins should be regulated in the United Kingdom, incorporating feedback from dozens of industry stakeholders but drawing criticism from those who say the rules remain too restrictive.
The consultation follows two years of review and offers a more refined regulatory approach than earlier drafts, though it still leaves uncertainty for issuers and users.
Industry Feedback Shapes New Proposal
The BOE published its updated document on Nov. 10, reflecting input from 46 stakeholders including banks, payment service firms, academics, and trade groups.
Earlier proposals had been criticized for being overly harsh and potentially damaging to innovation within the domestic crypto sector.
Tom Rhodes, chief legal officer at Agant, said the central bank has made progress but continues to take a highly cautious stance.
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He described the approach as “disproportionately cautious and restrictive,” though he acknowledged the inclusion of promising features such as BOE liquidity lines and the ability for issuers to repo reserves.
Stablecoin Limits Remain a Major Concern
One of the most controversial elements of the proposal is the cap placed on what the BOE calls “systemic retail stablecoins” — tokens used widely for everyday payments such as shopping or salaries.
Under the plan, individuals would be limited to holding £20,000 of such stablecoins, while businesses would face a cap of £10 million.
Crypto influencer Aleksandra Huk reacted strongly, saying: “Bank of England wants to cap stablecoin holdings at £20,000. Who gave them the right to tell us what to buy, where to store our money and how much we can have? […] Honestly, this is the best advert ever for privacy coins and for leaving the UK.”
However, Geoff Richards of Ontology noted that the rules apply only to sterling-denominated stablecoins that could become systemic, not to tokens like USDT or USDC.
Financial Stability at the Core of Restrictions
Ian Taylor of CryptoUK said he understands the BOE’s caution, highlighting that the bank must protect financial stability and ensure that deposits supporting lending remain intact.
He argued that moving large amounts of capital into stablecoins could reduce banks’ ability to lend, creating economic risks.
At the same time, Taylor warned that enforcing caps would be difficult because stablecoins can be acquired across multiple platforms, secondary markets, or through peer-to-peer transactions.
Regulatory Progress Still Slow
Although the BOE’s newest draft includes improvements, critics say the pace of regulatory development remains too slow for the rapidly evolving industry.
Taylor stressed that the UK has been discussing stablecoin rules for nearly five years without establishing a full licensing framework.
This uncertainty has pushed some crypto businesses to relocate to countries with clearer regulations.
Arvin Abraham, partner at Goodwin Procter, said that “clarity and speed” are needed to make the UK competitive.
He called for predictable timelines and a clear runway to help issuers understand approval pathways.
Despite the frustrations, Abraham said the BOE has shown a willingness to take a balanced approach.
He noted that innovation is welcome but must be paired with “money-grade controls” for tokens intended to function like currency.
