The Bank of England is moving to revise core elements of its proposed framework for sterling stablecoins, Deputy Governor Sarah Breeden confirmed this month, after regulated firms and crypto industry groups mounted a broad-based challenge to proposals published in November 2025. The potential rollback affects two of the most contested provisions: a £20,000 ceiling on individual holdings and a requirement that issuers hold 40% of backing assets in non-interest-bearing accounts at the BoE.

"What we have heard from industry is that the way we have proposed to implement limits is cumbersome operationally for a temporary measure," Breeden told the Financial Times. "So we are genuinely open to thinking whether there are other ways of achieving our objective." The BoE's stated concern is deposit-shift risk, the possibility that depositors could rapidly move money from commercial banks into stablecoins. Industry critics argued the proposed restrictions were disproportionate to a market that, by the BoE's own acknowledgement, currently holds only millions of dollars in circulation.

The figures support that characterisation. tGBP, the leading sterling-denominated stablecoin issued by BCP Technologies Ltd, an FCA-registered firm, and the first GBP-backed token to list on a major centralised exchange (Kraken, November 2025), has a circulating supply of roughly 8.5 million tokens, implying a market cap of approximately £8.5 to £11 million. For context, the global stablecoin market sits at around $323 billion, with Tether (USDT) alone accounting for close to $190 billion. Sterling stablecoins represent a fraction of a percent of that total. The regulatory framework being debated now will shape what gets built over the next several years, not what exists today.

The November 2025 consultation also proposed that issuers hold the remaining 60% of reserves in short-term UK government debt. Critics focused particular objections on the zero-interest deposit requirement, arguing it would structurally disadvantage sterling stablecoin issuers compared to US dollar competitors. USDT and USDC generate yield on their treasury-backed reserves; a UK issuer forced to park 40% of assets in non-interest-bearing accounts at the BoE would operate at a structural cost disadvantage. Benoit Marzouk, CEO of tGBP, argued that wallet restrictions of this kind would damage innovation, while Freddie New of Bitcoin Policy UK warned that holding caps would send a "terrible signal" to the market. Industry groups cautioned that the combined effect of the cap and reserve requirements would push sterling stablecoin activity to less regulated offshore venues, directly undercutting the government's stated goal of making the UK a competitive crypto hub.

The broader legislative scaffolding is now in place. The Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026 came into force on 4 February 2026, providing the statutory backbone for the UK's crypto framework, with the full regime taking effect in October 2027. Under that structure, HM Treasury retains the power to formally recognise a stablecoin as systemic, a designation that triggers BoE prudential oversight and explains why the regulatory regime is distributed across HM Treasury, the BoE, and the FCA. The Financial Conduct Authority, which handles conduct oversight while the BoE covers prudential rules, has identified pound-linked stablecoins as a top 2026 priority and is running a dedicated sandbox with four firms selected to test stablecoin issuance, wholesale settlement, and crypto trading use cases. Final Codes of Practice from the BoE are expected by late 2026.

For the UK's South Asian and African diaspora communities, the design of these rules carries concrete financial implications. The UK sends more than £18 billion in remittances abroad each year. Pakistan receives approximately £4.24 billion annually, India £4.17 billion, and Nigeria £3.90 billion. Average global remittance costs stood at 6.49% in 2025; Sub-Saharan Africa corridors averaged 8.78%. The UN Sustainable Development Goal target is to bring those costs below 3%. A functional sterling stablecoin could compress costs on GBP-denominated corridors by enabling direct on-chain settlement, cutting out correspondent banking intermediaries that add cost. Firms such as Nala, which is already building stablecoin settlement rails for Africa and Asia payouts, illustrate the kind of operator that would benefit most from a competitive and well-regulated GBP stablecoin. The original £20,000 individual holding cap would have created an immediate ceiling for community organisations and diaspora entrepreneurs managing regular payment flows. Its potential removal matters to those users in practical terms. Equally, if BoE rules remain unworkable and sterling stablecoin activity migrates offshore, end-users in Lagos, Lahore, or Mumbai lose the consumer protections that a UK-regulated instrument would carry. A well-calibrated domestic framework serves those corridors better than no framework at all.

The BoE's consultation closed on 10 February 2026. No revised proposal timeline has been published. Until the Codes of Practice are finalised, developers and payment operators building on sterling stablecoin rails are working without full regulatory certainty. Breeden's comments indicate the direction of travel is toward a less restrictive regime, but the specific parameters of any revised holding limits and reserve requirements remain undecided. Builders targeting GBP remittance corridors should treat the next BoE consultation round as a key milestone for project planning.