Bank of England Plans Waivers for Crypto Firms as Stablecoin Limits Face Industry Pushback

Bank Of England Considers Exemptions To Stablecoin Limits As Global Competition Grows

The Bank of England is preparing to ease its proposed restrictions on corporate stablecoin holdings, offering waivers to certain businesses amid growing pressure from the crypto industry.

Bloomberg reported that the UK central bank plans to allow exemptions for firms such as crypto exchanges that require large stablecoin reserves for operations and trading.

The bank also intends to permit stablecoins as settlement assets in its experimental Digital Securities Sandbox, a move aimed at providing a controlled environment for blockchain-based transactions.

Why Are Stablecoin Limits Being Reconsidered

Earlier proposals from the Bank of England and the Financial Conduct Authority suggested caps of £20,000 for individuals and £10 million for businesses on systemic stablecoins—tokens widely used for payments.

These restrictions drew criticism from the crypto sector, with industry participants warning that overly strict rules could divert liquidity and innovation to markets like the US.

The Trump administration’s recent GENIUS Act has already established regulatory clarity for dollar-backed stablecoins, raising concerns that the UK might fall behind.

Bailey Signals A Softer Stance On Stablecoins

Governor Andrew Bailey has gradually shifted his position on stablecoins.

While previously cautioning that they could erode public trust in money, he recently stated in the Financial Times that opposing stablecoins “as a matter of principle” would be “wrong.”

He added:

“Indeed, I do not hold that view, recognising their potential in driving innovation in payments systems both at home and across borders. Practice matters, however, and it is critical that these stablecoins satisfy the conditions that enable public trust.”

Exemptions Targeting Key Crypto Players

The proposed waivers are primarily aimed at firms that need to hold significant stablecoin balances for liquidity and transactional purposes.

Allowing these exemptions seeks to support the functioning of exchanges and other financial intermediaries while keeping systemic risk under control.

In addition, by allowing stablecoins within the Digital Securities Sandbox, the Bank of England will have the opportunity to observe their use in real-world applications before finalising broader regulations.

Stablecoins Could Play A Major Role In Future Payments

Despite sterling-backed stablecoins currently having a negligible market presence of £581,000, global circulation of stablecoins already exceeds $300 billion, with euro-linked tokens accounting for $468 million.

Bloomberg Intelligence projects that stablecoins could facilitate over $50 trillion in payments by 2030.

Banks and fintech firms increasingly view them as a faster and cheaper alternative to traditional payment rails, highlighting why regulators are re-evaluating limits.

Industry Pressure Drives Flexible Policy Options

In response to concerns from market participants, the Bank of England is also exploring allowing systemic stablecoins to back part of their reserves with high-quality assets such as short-term government bonds.

Such measures would align UK rules more closely with frameworks in the US and EU, addressing some of the industry’s unease over restrictive caps.

Will The UK Keep Pace With Global Stablecoin Rules

The consultation on stablecoin limits, expected later this year, will likely provide more clarity on exemptions and reserve requirements.

With regulatory competition intensifying, the Bank of England appears keen to balance oversight with innovation, offering a framework that encourages adoption while ensuring financial stability.

Stablecoins remain a small part of the UK market, but their rapid growth abroad makes them impossible for regulators to ignore.