The Bank of England has taken its most decisive step yet towards bringing stablecoins into the regulated financial mainstream, but reaction from across the fintech, payments and crypto sectors suggests the Central Bank may have pleased almost everyone on one front while leaving deep unease on another.
In a policy statement published on 22 June, the Bank unveiled draft rules for systemic sterling stablecoin issuers that scrapped earlier proposals for individual holding limits, raised the proportion of reserves that can be held in interest-bearing assets, and replaced per-wallet ownership caps with a temporary £40 billion issuance guardrail per systemic stablecoin. The framework is designed to allow regulated stablecoins to operate in the UK from 2027, subject to feedback by 22 September 2026 and a finalised Code of Practice by year-end.
Sarah Breeden, Deputy Governor for Financial Stability, called it “a major milestone in delivering greater choice and innovation in UK payments,” adding: “Innovation thrives on trust. And today we’ve set out the foundations of that trust for a new form of money — with prompt redemption, strong protections and central bank support. This is truly a world-leading regime.”
Yet for all the warm words from Threadneedle Street, the industry response tells a more complicated story — one in which a genuinely welcome regulatory shift sits alongside persistent anxiety about whether the UK is being bold enough to compete globally.
THE POLICY: WHAT ACTUALLY CHANGED
The policy statement represents a significant revision of proposals the Bank consulted on in late 2025. Three changes stand out.
First, the Bank abandoned its earlier plan to impose temporary holding limits on how much stablecoin any individual or business could own. The proposal had drawn sustained criticism from industry and Parliament alike, with detractors warning it would make UK-issued stablecoins less attractive than dollar or euro alternatives. In its place, the Bank introduced a temporary issuance guardrail capping each systemic stablecoin at £40 billion in total circulation, a measure it says delivers the same policy outcome of protecting credit provision while being cheaper and simpler to implement and allowing unrestricted use by households and businesses.
Second, the Bank increased the maximum share of backing assets that issuers may hold in short-term UK government debt from 60 per cent to 70 per cent, with the remaining 30 per cent to be held in non-interest-bearing deposits at the Bank of England. The change is intended to support more viable business models whilst still ensuring issuers can meet redemption demands promptly.
Third, the Bank and the Financial Conduct Authority confirmed they are working together on an end-to-end regime, including a managed transition pathway as firms grow from non-systemic to systemic status. Further detail is expected alongside the FCA’s final rules.
PARLIAMENT APPLAUDS
The strongest unconditional endorsement came from Westminster. Lord Vaizey of Didcot and Gurinder Singh Josan CBE MP, Co-Chairs of the Crypto and Digital Assets All-Party Parliamentary Group, issued a joint statement describing the decision as “a significant and positive step forward for the UK’s digital assets sector.”
“The APPG has consistently raised concerns that the proposed limits risked putting the UK out of step with other major international markets and could have held back the development of a competitive UK stablecoin market,” they said. “It is encouraging to see the Bank listening to feedback from industry and Parliament and adapting its approach.”
The Co-Chairs framed the announcement squarely in terms of international competitiveness, warning that “as jurisdictions such as the United States, the European Union and others continue to move ahead, it is vital that the UK remains internationally competitive and avoids creating unnecessary barriers to innovation.”
PAYMENTS INDUSTRY: CAUTIOUS OPTIMISM
Among payments firms and cross-border infrastructure providers, the reaction was broadly positive, though tempered by operational realism.
Kristaps Zips, UK CEO at payabl, described the announcement as “a meaningful step forward for the UK payments sector.” He argued that replacing per-wallet caps with an issuer-level issuance limit “gives UK businesses room to build with confidence” and “signals that the Bank of England wants stablecoins to find a real role in the economy, not sit in a regulatory holding pen.”
Zips positioned stablecoins as a complement rather than a competitor to existing payment rails: “They can settle faster, cost less and remove much of the friction businesses currently absorb when transacting between markets. They are not going to replace cards, A2A or correspondent banking any time soon, and they don’t need to.”
Sam Coyne, Europe CEO at Currenxie, struck a similar note, focusing on the implications for small and medium-sized enterprises. “Currently, many businesses face poor value on cross-border payments in particular, with high foreign exchange fees and slow transaction times,” he said. “For some SMEs, stablecoins could offer an additional cost-effective payment rail to improve cash flow management and provide an edge over competitors to fuel growth.”
Justin Jacobs, Chief Policy and Engagement Officer at Pay.UK, offered a more structural perspective. While welcoming the direction of travel, he cautioned that the true test of stablecoins will not be the technology itself but “how successfully it integrates with the existing ecosystem.” The risk, he suggested, is the creation of “parallel systems” that fragment the payments landscape rather than enhancing it. Robust fraud prevention and consumer dispute resolution rules “must be baked into digital money from day one,” he argued.
THE CRITICAL VOICES: NOT BOLD ENOUGH
The sharpest criticism came from Innovate Finance, the UK fintech industry body. Its CEO, Janine Hirt, warned that “despite some positive changes in response to industry feedback, the Bank of England’s approach still risks creating the most conservative and cautious stablecoin regime in the world.”
Hirt took direct aim at the 30 per cent central bank deposit requirement, arguing it “removes a third of the potential revenue for service providers and issuers and means that firms in the UK would have to develop entirely different business models compared to the rest of the world.” She noted that the UK would be “the only country in the world that requires a significant proportion of assets to be held in deposits that earn no return.”
On the new supply-side issuance guardrail, Hirt was equally forthright: the limit “could hold back Britain’s plans for tokenisation of wholesale capital markets, which will potentially see significant trading volumes, and could create instability in the market if demand exceeds supply.”
The broadest charge was one of competitive positioning. Hirt argued that the Bank’s approach “is more cautious than not only the US, Singapore and UAE but also the EU and Canada,” and warned of “a significantly increased risk of dollarisation of the economy” if the framework discourages sterling stablecoin issuance.
Mark Fairless, CEO of ClearBank, echoed several of these themes. “The UK cannot win the global race on digital assets if sterling stablecoins remain less commercially viable or less useful than their dollar and euro counterparts,” he said. Fairless acknowledged that the Bank had “clearly listened on holding limits” but pressed for further changes to the backing asset requirements and warned that “it is near impossible for banks to issue stablecoins in a commercially viable way, meaning the UK is playing catch up with its global counterparts.”
Nigel Brook-Walters, Chief Revenue Officer at CoinPayments, was blunter still, calling the shift on holding limits “a significant climb-down” and arguing that “a self-imposed cap creates a perception of nervousness.” He pointed out that “the UK is the only jurisdiction in the world proposing to limit issuance of stablecoins in its own currency” and cautioned that unless “‘temporary’ is better defined, international issuers will default to dollar stablecoins and the UK will remain a second-tier market by design.”
Brook-Walters offered a pithy summary of where the framework now sits: “The Bank of England has moved from a framework that would have made sterling stablecoins uncompetitive globally to one that makes them viable, but not yet fully compelling. The gap between viable and compelling is now a policy choice, and it sits with HM Treasury.”
THE BIGGER PICTURE: TRUST, GOVERNANCE AND INFRASTRUCTURE
Several commentators stepped back from the immediate policy detail to address the broader questions the framework raises about the future of money.
Marcos Viriato, CEO and co-founder of Parfin, developer of the Rayls blockchain platform, described the announcement as more than a regulatory milestone. “For the first time, institutions in the UK have a real roadmap for how digital money fits into the financial system,” he said. But he cautioned that “the bigger opportunity lies beyond simply issuing stablecoins. As adoption grows, the conversation will increasingly turn towards interoperability, settlement and how different forms of digital money work together.”
Andrew Jones, Co-founder and Managing Director of ChilliMint, offered perhaps the most philosophically provocative take, arguing that “stablecoins are becoming less of a technology story and more of a trust story.” He observed that the public still does not know “where stablecoin reserves are held, who’s responsible if something goes wrong, who do I call when there’s a problem, or how to use one in the first place.”
Jones highlighted what he called the central irony: “Stablecoins were originally designed to sit outside traditional financial systems. Yet their long-term success increasingly depends on adopting many of the same principles that made traditional payments work in the first place.” He also noted the fragmentation risk inherent in divergent national approaches: “The US has its approach. Europe has MiCA. The UK is building its own framework. Stablecoins were supposed to remove borders, but regulation is increasingly redrawing them.”
Carl Grimstad, CEO and co-founder of Lydian, took a more bullish view, describing the BoE’s move as “a true reality check” and “the first real admission we’ve seen that the old closed-loop financial model is effectively dead.” He argued that “strict limits were always just a band aid for a lack of visibility” and that by loosening its grip, “the UK is finally acknowledging that assets like USDT are the plumbing for global liquidity.”
Anthony Yeung, Chief Commercial Officer at CoinCover, brought the conversation back to operational resilience. While endorsing the shift to an issuance guardrail as “a more balanced approach,” he warned that “financial stability is only one part of the trust equation.” Lost credentials, compromised wallets and failures in key management “remain persistent risks that can undermine confidence in the ecosystem,” he said, calling for “robust custody solutions, secure key management and transparent recovery mechanisms.”
WHERE THE INDUSTRY AGREES — AND WHERE IT DOES NOT
Reading across the responses, several points of consensus emerge. Virtually everyone welcomed the removal of individual holding limits, which were seen as unworkable and competitively damaging. There is broad agreement that the UK needed to act, that stablecoins have a legitimate future in payments, and that the 2027 timeline gives the market useful visibility.
The disagreements are equally clear. They centre on whether the framework is ambitious enough to attract and retain global issuers, whether the 30 per cent non-remunerated deposit requirement fatally undermines commercial viability, and whether the £40 billion issuance cap — even as a temporary measure — sends a signal of caution that will push international players towards dollar-denominated alternatives.
There is also a divide between those who see the framework primarily through a competitive lens — asking whether the UK can match the US, EU and Singapore — and those who see it through an infrastructure lens, asking whether stablecoins can be made to work safely alongside existing payment systems without fragmenting them.
EDITORIAL SYNTHESIS
The Bank of England deserves credit for listening. The original consultation proposals, particularly the individual holding limits, drew near-universal criticism, and the Bank has responded with a framework that is materially more workable. The shift from demand-side caps to a supply-side issuance guardrail is a pragmatic compromise that preserves financial stability objectives while removing the most operationally burdensome restrictions.
But the critics have a point. The 30 per cent non-remunerated deposit requirement is a genuinely unusual feature in global terms, and if it proves to be a structural disadvantage for UK-based issuers, it will be difficult to argue that the regime is truly competitive. The £40 billion issuance cap, meanwhile, may be adequate for the near term, but the absence of a clear mechanism for review and removal risks entrenching what was intended to be temporary.
The deeper challenge, as several commentators noted, lies not in the rules themselves but in the infrastructure, interoperability and governance arrangements that will determine whether sterling stablecoins can scale. The Bank has written the regulatory chapter. The question now is whether the market — and the Government — are prepared to write the next one.
The consultation on the draft Code of Practice closes on 22 September 2026. The Bank intends to finalise the rules by the end of the year, with regulated stablecoins operational from 2027.
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