The Bank of England (BoE) has clarified that its proposed restrictions on stablecoin usage are not meant to be permanent. According to Deputy Governor Sarah Breeden, these measures are being introduced as a short-term step to ensure financial stability during the early adoption phase of digital currencies.
The plan to cap stablecoin holdings and transaction volumes was first introduced in a discussion paper back in November 2023. While the central bank emphasized the importance of managing systemic risks, several crypto industry groups voiced concerns in September 2025, claiming the proposal could slow innovation and make the UK less attractive for crypto businesses.
Speaking at DC Fintech Week, Breeden explained that the limits are intended as a temporary “bridge” to help the financial system adapt to stablecoins without disrupting existing credit channels.
“We plan to lift these limits once we’re confident that the shift to stablecoins no longer threatens financing to the real economy,” she said.
The restrictions, initially proposed to range between £10,000 and £20,000 ($13,400–$26,800), drew criticism from experts who argued such tight controls could discourage new projects and signal regulatory hostility toward crypto.
Consultation Coming Before Year-End
Breeden announced that the BoE will launch a public consultation before the end of the year to gather feedback on how these limits should be structured and eventually removed.
“We’ll soon consult on our proposed framework for sterling-denominated stablecoins used in systemic payment systems,” she said. “Our goal is to remain open to feedback as we finalize the rules.”
Among the options under consideration are higher limits for businesses and exemptions for large retailers such as supermarkets. The BoE is also exploring special treatment for companies operating within the UK’s Digital Sandbox, launched in October 2024, which allows businesses to test blockchain-based innovations under supervision.
Preventing Sudden Bank Outflows
The central bank’s biggest concern is the potential for rapid fund transfers from banks to stablecoins, which could cause a sharp decline in available credit for households and businesses. Breeden emphasized that the UK economy relies heavily on bank lending compared to other countries like the US, making a cautious transition vital.
“Applying temporary limits on users’ stablecoin holdings is the best way to prevent a sudden drop in credit availability,” she explained.
Balancing Innovation and Stability
While the BoE wants to prevent instability, it also acknowledges the growing role of digital assets in the modern economy. Breeden noted that central bank money will continue to dominate wholesale payments and settlements to minimize systemic risk, but regulated stablecoins and tokenized deposits will have an important place in the evolving financial ecosystem.
“We can’t do this alone,” Breeden said. “We need collaboration from both established players and new entrants to test, innovate, and build real-world applications.”
What’s Next?
The upcoming consultation will determine how quickly the UK moves toward integrating stablecoins into its regulated financial framework. While the limits are temporary, the Bank of England’s approach suggests a measured but open attitude toward digital currencies—balancing innovation with systemic protection.
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