Some experts in the crypto industry argue that the Bank of England’s newly proposed rules for stablecoins remain unnecessarily strict, despite efforts to incorporate industry feedback.
The Bank of England (BOE) published its latest consultation paper on Nov. 10, two years after releasing its first discussion document. That earlier report raised major concerns in the crypto sector, with many warning it could harm the UK’s digital asset ecosystem.
The BOE said it reviewed feedback from 46 stakeholders, including banks, payment service providers, industry groups, academics, and individual respondents. While some of the toughest earlier proposals were scaled back, industry leaders believe the central bank remains overly cautious. Tom Rhodes, chief legal officer at stablecoin issuer Agant, described the BOE’s stance as “disproportionately cautious and restrictive.”
BOE Maintains a Restrictive View on Stablecoins
Rhodes acknowledged that the updated proposal includes notable improvements. These include potential BOE liquidity lines and the ability to repo reserves for liquidity support. He said the UK market could benefit further if these ideas are expanded into a more competitive framework without compromising stability.
However, Rhodes added that the central bank has been unusually vocal about the risks of stablecoins. One of the most controversial elements is the proposed limits on so-called “systemic retail stablecoins.” These refer to stablecoins used widely for everyday payments such as salaries or shopping.
The BOE suggested caps of £20,000 per individual and £10 million for businesses accepting stablecoins as payment. Although these limits are higher than earlier proposals, many in the crypto community criticized the idea of restricting how much stablecoin users can hold. Influencer Aleksandra Huk argued that such caps undermine financial freedom and could push users towards privacy coins or even out of the UK.
There are, however, important caveats. Geoff Richards from the Ontology Network noted that the proposal only applies to sterling-denominated stablecoins that could become “systemic.” Large USD stablecoins like USDT and USDC would be unaffected. Ian Taylor from CryptoUK said he understands the BOE’s cautious approach, explaining that removing deposits from the banking system could reduce lending capacity and harm financial stability.
Rhodes also pointed out that most UK stablecoins will not fall under the systemic category. Even Mastercard was only designated “systemically important” in 2021. Non-systemic stablecoins will instead fall under the Financial Conduct Authority (FCA), which uses a less restrictive framework.
Slow Progress Still Frustrates the Industry
Although access to central bank liquidity and BOE deposit accounts is seen as positive, many argue there is still a long road ahead. Rhodes said the threshold at which a stablecoin becomes “systemic” remains unclear, making it difficult for issuers to plan. Clarification from His Majesty’s Treasury would help issuers understand when their scale might pose a broader risk.
Operational enforcement of the proposed caps is also uncertain. Taylor noted that stablecoins can be acquired from exchanges, peer-to-peer transfers, or even as workplace compensation, making it hard for issuers to monitor individual limits.
Industry leaders stress that clearer timelines and faster regulatory progress are needed to keep the UK competitive. Arvin Abraham from Goodwin Procter said issuers need predictable processes and “a clean runway” to bring products to market.
Regulation in the UK has been developing slowly. The government first introduced AML and KYC rules for crypto businesses in 2017, but a full stablecoin licensing framework is still not finalized eight years later. Taylor warned that this delays business growth and may push companies offshore to jurisdictions with more mature regulations.
Despite the slow pace, Abraham said the BOE is taking a fair and pragmatic approach. He noted that the message remains consistent: innovation is welcome, but if a token is going to function like money, it must follow standards that match traditional financial controls.
