The Bank of England is reviewing its proposed regulatory framework for digital currencies, signaling a potential shift towards capping total stablecoin issuance rather than limiting what individual users can hold.
Deputy Governor Sarah Breeden revealed Tuesday at the CityWeek 2026 conference that the central bank is evaluating “temporary guardrails” on the aggregate volume of stablecoins. The approach aims to shield the traditional banking sector from sudden capital flight without stifling financial innovation.
The central bank previously sparked industry backlash after outlining strict limits for sterling-denominated stablecoins used in everyday transactions. Under those prior proposals, individual wallets would have been capped at £20,000 ($26,786), while businesses faced a 10 million-pound restriction. Crypto companies criticized these rules, calling them some of the most punitive policies globally.
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Stablecoins are digital assets designed to maintain a steady value by pegging themselves to traditional fiat currencies like the U.S. dollar or the British pound. They have rapidly gained traction as alternative means for domestic and international retail payments, independent of traditional clearing networks.
However, the Bank of England has expressed anxiety over how a sudden, massive migration of capital from conventional bank accounts into private digital tokens might destabilize the broader financial system. Central bankers fear such outflows could severely diminish the liquidity available to commercial banks, ultimately triggering a credit crunch that reduces the availability of loans for everyday borrowers.
Breeden suggested that managing the overall market supply of stablecoins rather than monitoring consumer accounts could protect the credit pipeline more effectively. She noted that the alternative framework achieves the central bank’s stability goals at a lower operational cost to the sector, while simultaneously accommodating high-value corporate payment strategies.
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The regulatory update also provided clarity for traditional lenders. Under the emerging guidelines, banks will be permitted to issue stablecoins, provided the digital assets originate from non-deposit-taking corporate entities. These subsidiaries must utilize distinct branding, though they are permitted to reference their parent financial institutions.
The Bank of England plans to publish its comprehensive draft rules next month. Officials aim to finalize the framework by the end of the year, a timeline that Breeden noted aligns closely with parallel regulatory schedules in the United States.