According to a report from Bloomberg on Tuesday, the Bank of England (BoE) is planning to alleviate its anticipated restrictions on stablecoin holdings by allowing certain companies, including crypto exchanges, to be exempted. The decision follows a pressure the UK is facing to match the pace of the United States, which has recently made a regulatory framework for dollar-backed stablecoins clearer.
In the case of individuals, the Bank of England had already proposed limiting the value of stablecoin holdings to £20,000 ($26,832), while for businesses the cap was set at £10 million ($13.4 million). The planned imposition of these limits, which were supposed to be communicated through a consultation later this year, prompted an outcry from crypto market participants who believed that such caps would discourage the industry to further grow and be adopted.
Now, as per Bloomberg’s information, the central bank intends to provide exemptions to a crypto exchange, a company that needs to keep a big stablecoin reserve in order to facilitate customer deposits and trading, among other operations. Moreover, the BoE plans to permit the use of stablecoins as settlement instruments in its Digital Securities Sandbox, which is an experimental framework aimed at testing the market infrastructure for digital assets.
The UK’s consideration of exemptions reflects rising concerns that its approach may fall behind competing jurisdictions. In the U.S., the recently passed GENIUS Act under the Trump administration established a federal standard for dollar-back stablecoins, thus making the sector more attractive to institutional investors and facilitating their involvement.
Proponents of the crypto industry have voiced the opinion that if there are no flexible rules, London may cease to be a global financial center of digital assets. The Bank of England’s (BoE) changed position reflects the Governor Andrew Bailey’s views who, in his recent letter to the Financial Times, stated that stablecoins should not be opposed just because of their nature. On the contrary, he pointed out their potential as one of the main drivers of innovation in the payment systems area both locally and internationally, if they are trustworthy and safe.
The changing regulation is a sign that the Bank of England is trying to find a middle ground between its commitment to financial stability and its willingness to support innovation in the field of digital finance as the authorities consider stablecoins integration into the general monetary system.
