UK Crypto Regulation Moves Forward With BoE’s New Stablecoin Approach

The Bank of England is softening its stance on stablecoin regulation, signaling a strategic pivot to retain fintech competitiveness. Proposed exemptions for crypto exchanges and fintech firms would allow larger stablecoin reserves—addressing liquidity concerns that previously threatened to drive innovation offshore.

Central bank officials are also testing blockchain integration through the Digital Securities Sandbox, a controlled environment for experimenting with distributed ledger settlements. This follows earlier proposals for restrictive caps of £20,000 for individuals and £10 million for institutional holdings.

Market participants had warned that rigid limits could divert growth to more accommodating jurisdictions like the EU or US. "Overly tight restrictions WOULD risk stifling innovation in one of the most dynamic areas of fintech," noted a UK-based analyst.