Summary of Proposed Regulations
The Bank of England (BOE) is introducing regulations for stablecoins in the United Kingdom, including holding limits to safeguard financial stability, particularly in relation to the UK's bank-based mortgage market. The BOE aims to establish a comprehensive regulatory framework by 2025, mirroring the speed and effectiveness of regulatory actions seen in the United States. Deputy Governor for Financial Stability, Sarah Breeden, highlighted the importance of this initiative.
Proposed Limits and Regulatory Framework
A consultation on stablecoin regulation, detailed in a proposed framework, is scheduled for publication on November 10, 2025. This framework includes a proposed holding limit of £20,000 for individual consumers and £10 million for business organizations. These proposals were announced by Sarah Breeden during her keynote address at the Association of Financial Markets in Europe’s annual operations conference. The regulations will initially target systemic stablecoins, which are defined by their widespread use in payments. Other stablecoins will continue to be regulated under the Financial Conduct Authority's existing, less stringent regime.
Enhancing Stability through Reserve Requirements
The BOE also intends to implement stringent reserve requirements for issuers of systemic stablecoins. Sasha Mills, Executive Director for Payments, Digital and Innovation at the BOE, stated that these issuers might be mandated to hold a portion of their reserves in central bank deposits. This measure is designed to reduce the reliance on commercial banks, thereby bolstering financial stability. While no direct funding or grants are currently associated with this regulatory shift, the BOE's preparedness to offer accounts to stablecoin issuers signifies institutional backing. Further details and insights from Sasha Mills can be found in her keynote speech at the Association of Financial Markets in Europe's Annual Operations.
Impacts on Market and Community Response
The proposed framework is expected to influence major stablecoins such as USDC, USDT, and PayPal’s PYUSD. Current data available as of November 7, 2025, shows a moderate increase in the Total Value Locked (TVL) for stablecoins within UK-based DeFi protocols, but no significant shifts in liquidity or staking flows have been observed. The announcement has elicited a mixed response from the community. Discussions on platforms like Twitter, Reddit, and Telegram reveal that while some welcome regulatory clarity, others are concerned about the potential impact of holding limits on adoption. Arthur Hayes, former CEO of BitMEX, has voiced concerns that stringent regulations might encourage innovation to move offshore.
Past Regulatory Events and Insights
The UK's current regulatory approach shares similarities with past initiatives such as the EU's MiCA framework and the US's GENIUS Act. These past events have contributed to increased institutional adoption and market adjustments, initially causing volatility in governance tokens and DeFi protocols before stabilizing. Major stablecoins were among the assets affected, and a similar pattern is anticipated for the UK market. Prominent figures in the cryptocurrency space have also shared their views. Vitalik Buterin, co-founder of Ethereum, acknowledged the need for stablecoin regulation but cautioned against hindering innovation. CZ, CEO of Binance, expressed support for regulatory clarity while noting concerns that limits could impede adoption efforts.
The Bank of England's official Twitter account has confirmed the dates for the upcoming consultation, reaffirming its commitment to fostering stability and innovation within the digital asset sector.