The Bank of England has significantly softened its proposed stablecoin regulations following industry pushback. The most notable change is the removal of individual holding caps (previously £20,000 for individuals, £10mn for businesses), replaced by per-issuer issuance limits. Reserve rules have also been relaxed, allowing issuers to hold more backing assets in short-term UK government debt rather than unremunerated central bank deposits. Deputy Governor Sarah Breeden acknowledged the initial proposals may have been 'overly conservative.' The revised framework is open for feedback until September 2026, with regulated stablecoins expected to operate in the UK from 2027. The shift is partly driven by competitive pressure from the US, where a federal stablecoin law has given issuers clearer operating conditions.
