The Bank of England’s revised stablecoin proposals ease earlier restrictions, allowing issuers to invest up to 60% of reserves in government debt — a major shift toward integrating digital assets into the UK’s financial system.
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| In a major policy shift, the Bank of England plans to let stablecoin issuers invest 60% of reserves in UK government debt, easing earlier restrictions to encourage market viability and innovation. Image: CH |
London, United Kingdom — November 11, 2025:
The Bank of England (BoE) has signaled a notable policy shift toward the digital assets sector, proposing to allow stablecoin issuers to invest up to 60% of their reserve assets in government debt — a significant softening of its previously stringent stance. The move, unveiled in a consultation paper released Monday, highlights the UK’s evolving strategy to balance innovation and financial stability as it builds a regulatory framework for digital money.
The BoE’s earlier 2023 plan had drawn sharp criticism from the crypto industry. It required issuers to hold all their reserves in non–interest-bearing central bank accounts — a rule that would have made UK-issued stablecoins commercially unviable. The new proposal represents a pragmatic retreat. Under the revised rules, only 40% of reserves must now be held directly with the central bank, while the remaining 60% can be invested in safe, interest-bearing assets such as UK government bonds.
“This marks a pivotal step toward implementing the UK’s stablecoin regime next year,” said Sarah Breeden, the BoE’s Deputy Governor for Financial Stability. “We’ve listened carefully to feedback and amended our proposals.”
The adjustment reflects the central bank’s recognition that overly tight restrictions risk pushing innovation offshore — a concern raised by both crypto companies and policymakers eager to position London as a competitive fintech hub.
While the new framework is more flexible, it remains tightly managed. The BoE will directly oversee only stablecoins deemed capable of becoming widely used for payments, while those focused on trading or investment will remain under the Financial Conduct Authority’s (FCA) supervision.
To prevent systemic risks, the BoE has retained temporary holding caps — £20,000 for individuals and £10 million for businesses — although larger institutions such as supermarkets or trading platforms can apply for exemptions. The limits will be lifted once the central bank is confident that stablecoin use no longer poses a threat to financial stability.
In a notable new provision, the BoE suggested that systemic stablecoin issuers could gain access to central bank liquidity facilities during times of stress — a backstop similar to that offered to commercial banks. This inclusion acknowledges that, as stablecoins integrate with mainstream finance, they may need access to emergency liquidity to maintain stability during market turmoil.
Additionally, issuers already regulated by the FCA will temporarily be allowed to invest up to 95% of their backing assets in high-quality liquid instruments — an interim measure designed to ease the transition toward the full BoE regime.
The crypto industry largely welcomed the BoE’s softened tone. However, some executives argued the new limits still fall short of enabling robust market growth.
Tom Duff Gordon, Vice President of International Policy at Coinbase, said the central bank should consider allowing up to 80% of reserves to be invested in high-quality liquid assets such as government bonds. “The industry also needs more clarity on when, and on what basis, these caps could be lifted,” he added.
The consultation, open until February 10, underscores the UK’s cautious but deliberate march toward stablecoin adoption. By easing rules while maintaining strict oversight, the BoE aims to foster innovation without compromising monetary stability or consumer protection.
As the United States and European Union advance their own crypto regulatory frameworks, the UK’s updated approach suggests it no longer seeks to lead with rigidity — but with realism.
The message from London is clear: stablecoins are here to stay, but they will play by the rules of the financial mainstream.