UK Softens Crypto Stance: BOE to Carve Out Stablecoin Caps After Backlash

Edyme

October 8, 2025

The central bank also plans to let companies use stablecoins as settlement assets in its Digital Securities Sandbox

The Bank of England (BOE) is preparing to soften its approach to stablecoin regulation by carving out exemptions from proposed caps on holdings..

The shift comes after pushback from crypto exchanges and payments firms worried that stringent limits would stifle growth just as the US races ahead with its own rules.

Exemptions and the sandbox approach

According to a Bloomberg report citing people familiar with the matter, the BOE intends to grant waivers to firms like exchanges and financial platforms that need to hold large reserves of stablecoins for operations.

The central bank also plans to let companies use stablecoins as settlement assets in its Digital Securities Sandbox, an experimental framework for testing tokenized securities under regulatory supervision.

This represents a notable adjustment from Governor Andrew Bailey’s earlier stance, which emphasized caution. As recently as July, Bailey warned that stablecoins could undermine public trust in money, while voicing support for tokenized versions of customer deposits instead.

By opening the door to exemptions, the BOE appears to be responding directly to industry calls for flexibility.

Balancing competitiveness with risk

The BOE’s consultation, expected before year’s end, is likely to propose caps of £20,000 for individuals and £10 million for businesses on stablecoin holdings.

Without exemptions, critics argue, such limits could push companies toward jurisdictions like the US, where the Genius Act introduced by the Trump administration has already created a live regulatory framework for dollar-backed stablecoins.

Sean Kiernan, CEO of UK-based platform Greengage, told Bloomberg that delays in UK policy could divert “liquidity, talent and investment” to New York rather than London.

Industry concerns are highlighted by the fact that of the $303 billion stablecoins currently in circulation, just £581,000 worth are tied to the British pound, compared with $468 million for euro-pegged coins, according to DefiLlama.

Stablecoins are increasingly seen by banks and fintechs as faster, cheaper payment rails and could be used for trillions in annual transactions by 2030, Bloomberg Intelligence projects.

Whether the BOE’s carveouts will be enough to keep the UK in the race remains to be seen, but the shift suggests regulators are listening to market feedback, even as they continue to weigh risks to monetary stability.