The Bank of England is scaling back its planned stablecoin regulations after pressure from the digital assets industry. Deputy governor Sarah Breeden acknowledged the central bank may have been "overly conservative" in its initial proposals and is now examining alternative approaches to managing risks as stablecoins become more prevalent.

The BoE had proposed ownership limits of £20,000 for individuals and £10mn for businesses on UK stablecoins, alongside a requirement that 40% of reserves be held as non-interest-bearing deposits at the central bank. Industry groups argued these rules were far more restrictive than US regulations and would make UK stablecoins less profitable to operate.

Sterling-based stablecoins currently represent less than 0.5% of the roughly $315bn global market. Breeden stated the BoE wants to create a regime where stablecoins can succeed and deliver benefits to users, while ensuring this new form of money remains safe. The central bank is now reconsidering its approach after industry feedback highlighted operational challenges with the proposed implementation.

Crypto firms have warned that overly restrictive rules risk pushing business elsewhere as the UK competes to become a digital assets hub. The BoE's retreat signals a careful balance between maintaining financial stability and fostering innovation in the rapidly evolving stablecoin sector.