UK Slaps 1% Cap on Bank Crypto Holdings – Here’s What It Means for 2026

UK regulators just drew a line in the digital sand—banks can't hold more than 1% of their assets in crypto by 2026. No more wild west portfolios for the suits in Canary Wharf.

Why the squeeze? The Bank of England's playing it safe after watching crypto's rollercoaster swings. They're not banning the future—just forcing old money to dip a toe instead of diving in headfirst.

Banks now face a choice: trim existing crypto exposure or miss out on the next bull run. Meanwhile, DeFi protocols are laughing all the way to the blockchain.

One City analyst quipped: 'Nothing says 'we don't trust our own risk models' like an arbitrary percentage cap.' But hey—at least they didn't go full China.

Why Banks Are Being Pulled Back from the Edge

David Bailey, director of prudential policy at the Bank of England, explained the thinking behind the restrictions. In short, volatile assets like Bitcoin are too unpredictable to form a big chunk of a bank’s portfolio. Bailey called for a “conservative approach,” saying banks need to manage crypto in a way that protects both themselves and their customers.

BREAKING: The Bank of England is taking steps to restrict cryptocurrency activities for commercial banks, aiming to promote financial stability across the UK.

Aimed at minimizing risks and ensuring a stable financial system.#Crypto #BankOfEngland #Finance #UK… pic.twitter.com/S8wlWC03o8

— Crypto News Hunters(@CryptoNewsHntrs) June 19, 2025

One Percent Is the Magic Number

Under the proposal, UK banks WOULD be expected to cap their holdings of cryptocurrencies at just one percent of their total assets. That’s a number coming straight from the Basel Committee, the global group that sets banking standards. The idea is to give crypto some room without letting it throw off the financial balance sheet.

More Reporting, More Transparency

It is not just about limits. Banks will also have to be more transparent. A new set of disclosure rules will roll out around the same time, requiring banks to share details about how much crypto they hold and in what form. That way, regulators and the public can see exactly how much risk is being taken on and where it’s coming from.

The FCA Is Covering the Consumer Side

The Financial Conduct Authority is working in parallel to set rules for how regular people interact with crypto. Some of the upcoming rules could ban borrowing money to buy crypto, put limits on lending and staking, and require platforms to step up compliance. These changes are all aimed at reducing the chance that people lose money they can’t afford to lose.

Why This Is Happening Now

The timing is no coincidence. After the collapses of Silvergate and Silicon Valley Bank, both of which had DEEP ties to crypto clients, regulators around the world got a serious wake-up call. The UK wants to be ahead of the next crisis, not reacting to it after the fact.

A Bigger Regulatory Puzzle

These upcoming bank rules are part of a wider plan. The UK is already setting up full regulations for crypto exchanges and trading platforms by 2026. The goal is to treat crypto like any other part of the financial system, with all the same responsibilities and guardrails.

What This Means for the Banks

Banks may dial back their crypto plans, focusing instead on services that carry less risk. That could mean helping clients store digital assets, process stablecoin payments, or work with blockchain in more controlled environments. They will also need to update their internal systems to meet new risk standards.

What to Expect Next

The Bank of England plans to release draft rules for public comment before finalizing anything. In the meantime, banks are expected to prepare by reviewing their crypto exposure and getting ready to comply. On the consumer side, the FCA’s new restrictions should land sometime next year.

Looking Forward

The UK is not banning crypto, but it is certainly setting firmer boundaries. These new rules aim to let the technology develop without putting the financial system in danger. If regulators strike the right balance, the UK could become a model for responsible crypto integration.

Key Takeaways

• The Bank of England will limit UK banks’ crypto holdings to 1% of total assets starting in 2026.
• The rule aims to reduce volatility risk and keep crypto from destabilizing traditional financial institutions.
• Banks will face new disclosure requirements, making their crypto exposure more transparent to regulators and the public.
• The FCA is working on consumer-facing rules that may restrict lending, staking, and leveraged crypto purchases.
• These rules are part of the UK’s broader effort to integrate crypto into the financial system with strict oversight.