Lawmakers push Bank of England to loosen stablecoin restrictions

The committee’s report argues that current proposals—specifically those limiting individual and business holdings—are overly prescriptive for such an early-stage sector. Lawmakers urged the central bank and the Financial Conduct Authority to adopt a more flexible, principles-based framework that evolves alongside the technology rather than forcing it into a narrow box.

Committee chair Sheila Noakes expressed skepticism regarding the Bank’s defensive stance. The central bank has long maintained that strict protections are essential to prevent a mass migration of capital from traditional bank deposits into stablecoins, a shift officials fear could trigger a credit crunch. However, signs of compromise are emerging; Deputy Governor Sarah Breeden recently suggested that the institution is reconsidering its stance on holding limits. The Bank of England is expected to release its final policy and draft rules for systemic stablecoins later this month.