The Bank of England is re-examining the restrictive stablecoin framework it floated last year, according to a May 14 report flagged by Coin Bureau citing UK industry sources. The review covers the proposed individual holding limits and the central bank reserve requirements that issuers had warned would make sterling-denominated stablecoins commercially unviable in Britain.
The original proposals, published in late 2025, capped retail holdings of any single systemic sterling stablecoin at £10,000 to £20,000 per person and required issuers to back tokens with deposits at the Bank of England rather than government securities or commercial bank balances. The industry response was unified and loud: those terms would strip issuers of any meaningful yield on reserves and make UK issuance a money-losing exercise.
Industry pushback against the 2025 framework
UK-regulated issuers, payment firms, and trade bodies have spent the past six months arguing that holding caps treat retail users as a systemic risk rather than as customers. The Payments Association and several MPs publicly criticised the framework as out of step with the EU's MiCA regime and the US GENIUS Act, both of which set reserve rules without imposing per-person ownership ceilings.
The reserve question carried even more weight. Forcing issuers to hold reserves at the Bank of England means zero interest income on customer balances. For comparison, US issuers earn 4 to 5 percent on Treasury bills backing dollar stablecoins, and that yield funds the entire business model. Without it, UK stablecoin issuance becomes a customer-acquisition cost with no revenue line attached.
Likely revisions to caps and reserves
The Coin Bureau report does not specify which rules are being relaxed first. The two most likely candidates are the holding cap, which has weaker market-stability justification than industry assumed, and the central bank reserve requirement, which has the largest direct effect on commercial viability.
Sources close to the consultation told Coin Bureau that BoE officials have signalled a willingness to allow a mix of reserves, including short-dated UK government debt, rather than pure central bank deposits. That single change would close most of the gap between the UK framework and the regimes the City of London competes with.
Holding caps may move from hard limits to risk-tiered thresholds, with higher allowances for users who pass enhanced KYC. The original blanket cap was the most criticised element of the 2025 proposal because it would have prevented stablecoins from being used for B2B settlement, payroll, or high-value e-commerce.
Context for the timing
Crypto markets were weak as the news circulated. Bitcoin traded at $79,602, down 1.6 percent on the day, with ETH at $2,261, down 2.0 percent, as of May 14, 2026. The CoinMarketCap Fear and Greed index sat at 46, neutral territory. None of that is directly connected to the BoE review, but it sets the backdrop for a UK industry that has watched the EU's MiCA regime onboard licensed issuers throughout 2025 while London waited for clarity.
Crypto.com just secured the UAE Central Bank's first VASP SVF license, Paybis took Latvia's first dual MiCA and PSD2 license, and tokenised products from JPMorgan and BlackRock have been routing through Ethereum rather than any UK-based infrastructure. The competitive cost of the BoE's original framework was already visible.
Practical effect for sterling stablecoins
If the holding cap softens, UK-licensed sterling stablecoins become usable for stablecoin spending on cards, treasury operations, and merchant settlement rather than only small-value retail payments. That widens the addressable market by an order of magnitude.
If the reserve mix loosens, issuers gain a yield curve to fund operations and offer competitive features. That is the difference between a UK stablecoin sector that exists on paper and one that ships product. Several UK-incorporated issuers have been waiting on the final framework before deciding whether to launch in Britain or move issuance to Ireland or Luxembourg.
The Bank of England has not yet published revised proposals. The next formal step is expected in the coming weeks, with a possible consultation document this summer ahead of any legislation in the autumn.
Overview
The Bank of England is reconsidering the holding caps and central bank reserve rules in its 2025 sterling stablecoin proposal after sustained pushback from UK issuers and industry bodies. A softer framework would close the gap with MiCA and the US GENIUS Act and make UK issuance commercially viable. No revised text has been published yet, but officials have signalled flexibility on both the reserve mix and the retail cap structure.
