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Bank of England’s shift on stablecoins signals a strategic reorientation amid geopolitical and financial risks

Saturday, 15 November 2025 5:02AM UTC

The Bank of England has softened its stance on stablecoins, introducing flexible regulations and considering a role as a lender of last resort, amid debates over influence and the need for financial stability.

The Bank of England’s recent shift towards a more accommodating stance on stablecoins marks a significant change in its regulatory approach and has sparked debate on whether this reflects a newfound belief in the technology or an attempt to align with the US financial agenda. Stablecoins, which are cryptocurrencies pegged to traditional currencies like the US dollar, have been touted as a potential catalyst for more efficient international payments, though they have also faced criticism for their role in facilitating illicit activities.

Two years ago, Bank of England Governor Andrew Bailey was dismissive of stablecoins, stating that they did not meet the standards expected of safe money, a view largely echoed by other global regulators. However, following President Donald Trump’s high praise of stablecoins as a revolutionary financial technology during his recent UK state visit, the Bank’s posture has notably softened. This includes a willingness to consider acting as a ‘lender of last resort’ for sterling stablecoin issuers, a move that marks a dramatic shift from previous scepticism. Whether this represents genuine institutional confidence or simply an act of deference to American influence remains a topic of speculation.

In November 2025, the Bank proposed a regulatory framework designed to balance innovation with financial stability as it prepares for the UK's stablecoin regime launch in 2026. Rather than requiring issuers to back stablecoins entirely with assets held at the Bank, as had been earlier suggested, the Bank now permits stablecoin issuers to hold up to 60% of their backing assets in short-term UK government debt. The remaining 40% must still be held with the Bank of England, but no interest will be earned on these reserves. This regulatory flexibility aims to ease operational constraints on issuers and better support the fledgling market.

Alongside asset backing rules, the Bank is implementing temporary holding caps on stablecoin balances to prevent risks such as rapid outflows which could destabilise traditional bank deposits during the initial adoption phase. These caps limit individual holdings to £20,000 and business holdings to £10 million, though there is provision to exempt businesses that require larger balances, including crypto exchanges and retail chains. According to the Bank, these limits are transitional and are expected to be relaxed or removed once the market matures and risks subside.

The proposals draw on lessons from recent financial turmoil, including the 2023 collapse of Silicon Valley Bank and the USDC de-pegging event, which exposed vulnerabilities in financial infrastructures tied to digital assets. Bank of England Deputy Governor Sarah Breeden warned that any further dilution of the regulations could jeopardise UK financial stability, potentially triggering a credit crunch. Her caution underscores the delicate balance regulators must strike between fostering innovation and protecting the financial system from systemic risks.

While some cryptocurrency advocacy groups have criticised the holding limits as impractical, the Bank of England has emphasised its commitment to managing risk carefully without stifling innovation. The public consultation on the proposed rules will remain open until February 2026, with final regulations expected to be published later that year. This measured approach reflects an attempt to integrate stablecoins into the UK's financial ecosystem while safeguarding against the types of financial shocks that have recently rocked markets globally.

This policy evolution comes amid broader reflections on economic challenges in the UK, where rising unemployment and public sector wage pressures paint a challenging backdrop for economic policy. Meanwhile, the opulence of London’s financial elite and shifting fortunes among the wealthiest families highlight ongoing contrasts in economic fortunes. The Bank of England’s cautious yet pragmatic approach to regulating stablecoins thus fits into a wider narrative of navigating modern financial disruptions and geopolitical influences.

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^[1] (The Spectator) - Paragraph 1, Paragraph 2, Paragraph 8
^[2] (Reuters) - Paragraph 3, Paragraph 6
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^[4] (Bank of England) - Paragraph 3, Paragraph 6
^[5] (Yahoo Finance) - Paragraph 5
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^[7] (Skadden) - Paragraph 3, Paragraph 6

Source: Noah Wire Services

More on this

https://www.spectator.co.uk/article/this-time-its-crypto-now-the-bank-of-england-bows-to-trump/ - Please view link - unable to able to access data
https://www.reuters.com/sustainability/boards-policy-regulation/bank-england-proposes-new-rules-stablecoins-2025-11-10/ - The Bank of England has proposed a more flexible regulatory framework for stablecoins, allowing issuers to invest up to 60% of their backing assets in short-term government debt, with the remaining 40% held with the Bank. This shift from a previous proposal requiring 100% of assets to be held with the Bank aims to support the launch of the UK's stablecoin regime in 2026. The Bank is also considering providing liquidity support to systemic stablecoin issuers during market stress, while maintaining caps on individual and business holdings to safeguard financial stability.
https://www.reuters.com/sustainability/boards-policy-regulation/bank-englands-breeden-says-diluting-stablecoin-rules-further-could-damage-2025-11-11/ - Bank of England Deputy Governor Sarah Breeden has cautioned that further weakening of stablecoin regulations could jeopardize financial stability in the UK and lead to a credit crunch. This warning followed the central bank's release of revised rules on systemic stablecoins used in payments. Key measures include a temporary cap of £20,000 per individual and £10 million per company on stablecoin holdings, and a mandate that issuers hold 40% of backing assets with the Bank of England without earning interest. These measures stem from lessons learned during financial stress events such as the 2023 failures of Silicon Valley Bank and USDC's dollar de-pegging.
https://www.bankofengland.co.uk/news/2025/november/boe-launches-consultation-on-regulating-systemic-stablecoins - The Bank of England has published a consultation paper outlining its proposed regulatory regime for sterling-denominated systemic stablecoins. The proposals include allowing issuers to hold up to 60% of backing assets in short-term UK government debt, with the remaining 40% held with the Bank. Temporary holding limits of £20,000 per individual and £10 million per business are also proposed to safeguard financial stability. The consultation is open until 10 February 2026, with the Bank planning to finalize the regulations in the second half of the year.
https://finance.yahoo.com/news/bank-england-proposes-20-000-135600317.html - The Bank of England has proposed temporary limits on stablecoin holdings for retail and business users and new rules for how issuers can manage their reserves. In a consultation paper published Monday, the central bank said individuals would be allowed to hold up to £20,000 (US$26,000) in a single systemic stablecoin, while businesses would face a £10 million (US$13.1 million) cap. Notably, the proposal “would not cover stablecoins used as assets for non-systemic purposes, such as the buying and selling of cryptoassets,” the bank wrote, adding that such cases remain to be “the predominant use of stablecoins today.” The restrictions are described as transitional, designed to prevent sudden outflows from traditional bank deposits during the initial phase of adoption. According to the Bank, the limits would be loosened and eventually removed once the risks to financial stability subside.
https://finance.yahoo.com/news/bank-england-confirms-plans-temporary-134612476.html - The Bank of England (BOE) has set out its proposed stablecoin regulatory regime, confirming plans to impose limits on holdings per coin. The U.K.'s central bank said on Monday it is proposing 'temporary' limits of 20,000 pounds ($26,300) per coin for individuals and 10 million pounds for businesses. The BOE added that these limits would be removed once the financial system has transitioned to the incorporation of stablecoins, digital tokens pegged to the value of a traditional financial (TradFi) asset such as a fiat currency. As previously reported, the BOE may also exempt businesses who need to hold large balances, such as crypto exchanges and even supermarkets, according to the consultation paper. The BOE's plans to introduce holding limits was met with criticism from some cryptocurrency groups, who branded them unworkable, when they were first reported in September.
https://www.skadden.com/insights/publications/2025/11/bank-of-england-revises-its-proposed-regime-for-regulating-systemic-stablecoins - The Bank of England has revised its proposed regulatory regime for systemic stablecoins, allowing issuers to hold up to 60% of backing assets in short-term UK government debt, with the remaining 40% held with the Bank. This change responds to industry feedback and aims to support the launch of the UK's stablecoin regime in 2026. The Bank is also considering providing liquidity support to systemic stablecoin issuers during market stress, while maintaining caps on individual and business holdings to safeguard financial stability.

Noah Fact Check Pro

The draft above was created using the information available at the time the story first emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed below. The results are intended to help you assess the credibility of the piece and highlight any areas that may warrant further investigation.

Freshness check

Score: 8

Notes: The narrative presents recent developments regarding the Bank of England's stance on stablecoins, with references to events from September 2025 and proposals from November 2025. The earliest known publication date of substantially similar content is October 1, 2025, when Reuters reported on Governor Andrew Bailey's statement that widely used stablecoins should be regulated like money. (reuters.com) The report includes updated data but recycles older material, which may justify a higher freshness score but should still be flagged.

Bank of England
Stablecoins
Financial regulation