Key Highlights

  • The House of Lords Financial Services Regulation Committee published a report titled "Stablecoins: Waiting for Regulation," urging the Bank of England to abandon pre-emptive holding caps of £20,000 for individuals and £10 million for businesses.

  • The committee also pushed back on a proposed requirement for stablecoin issuers to hold at least 40% of backing assets in unremunerated central bank deposits, arguing the rule threatens the business viability of the UK's sterling stablecoin market.

  • Bank of England Deputy Governor Sarah Breeden acknowledged last month that the original proposals were "overly conservative," signaling that revisions to the framework are already underway.

The UK House of Lords Financial Services Regulation Committee has called on the Bank of England to reconsider two of its most contested stablecoin proposals, warning that locking in restrictions before the market has developed could leave the country trailing behind the EU and the United States. The committee published its findings on June 2 in a report titled "Stablecoins: Waiting for Regulation."

The first proposal under scrutiny is the Bank of England's plan to cap individual stablecoin holdings at £20,000 and business holdings at £10 million. The committee argued that rather than setting hard limits ahead of market growth, the Bank should monitor the market and trigger restrictions only if financial stability risks clearly emerge. Imposing caps on a market that does not yet meaningfully exist, the report said, risks chilling adoption from the outset.

The second concern involves a reserve requirement that would mandate stablecoin issuers hold at least 40% of backing assets in unremunerated central bank deposits. The committee said this rule, stacked on top of holding limits, could make GBP-denominated stablecoin products economically unviable and push issuers toward jurisdictions with lighter-touch regulation.

Both proposals sit within a broader pattern of UK hesitancy that has drawn persistent industry criticism. While the EU has already activated its MiCA framework and the US has been advancing its own stablecoin legislation, the UK's regulatory process has lagged. Industry observers noted the Lords' report adds parliamentary weight to complaints that had previously come only from the private sector. Bank of England Deputy Governor Sarah Breeden indicated last month that the original proposals were "overly conservative" and that the central bank is actively reviewing alternatives, though no revised timeline has been confirmed.