UK to Match US Pace on Stablecoin Rules with Caps

Bank of England Deputy Governor Sarah Breeden has firmly committed to matching the United States’ pace for stablecoin regulation, announcing that Britain’s proposed regime will be unveiled on Monday and expected to become operational by the end of next year. At the SALT conference in London, Breeden explicitly stated, “Our aim is to make sure that our regime is up and running, just as quickly as the US,” directly addressing industry concerns that the UK was falling behind in the global regulatory race. This commitment comes as President Donald Trump signed the GENIUS Act into law in July, creating significant momentum for stablecoin adoption stateside.

The regulatory synchronization extends beyond timing to substantive policy coordination. The UK and US are advancing a joint task force launched in September to align crypto rules and ease cross-border capital flows, with policy recommendations due by March 2026. Paul Howard, senior director at crypto trading firm Wincent, welcomed Breeden’s timeline pledge, noting that “it’s great news that the UK will be up and running just as quickly as the U.S., where we have witnessed leadership from the very top.” Howard emphasized the strategic importance given Britain’s financial services sector generates over 40% of national GDP, making regulatory alignment “paramount to safeguard UK jobs and economic development.”

The proposed regulatory framework includes temporary holding caps of $26,087 (£20,000) for individual stablecoin users and $13 million (£10 million) for businesses, though exemptions are expected for large crypto exchanges and institutional players. Reports indicate that crypto exchanges and other large entities will be permitted to exceed the £10 million business limit, creating a tiered regulatory approach that acknowledges the practical needs of major market participants while maintaining oversight over retail usage.

Industry figures have expressed significant concerns about the practical implementation of these caps. Simon Jennings, Executive Director of the UK Cryptoasset Business Council, previously told Decrypt that the retail cap “remains critically important that these limits are recalibrated,” warning they could prove “cumbersome, costly and potentially unworkable” in practice. These concerns reflect broader industry apprehension about whether the proposed limits adequately balance consumer protection with practical usability in fast-moving crypto markets.

Deputy Governor Breeden downplayed these concerns at the conference, insisting that “it is less of an issue in practice than people might think.” The Bank of England has indicated the caps would be raised or removed completely once concerns about stablecoins’ impact on bank deposits and mortgage availability ease, with the central bank’s discussion paper explicitly stating limits “would be raised, or removed completely, if the Bank believes the risks to financial stability have been mitigated.”

Breeden justified Britain’s stricter regulatory approach by pointing to fundamental structural differences between UK and US credit markets. “People in the US get their mortgages from Fannie and Freddie, and they’re funded in financial markets,” she explained. “People in the UK get their mortgages from commercial banks.” This distinction underscores the Bank of England’s concern that stablecoin adoption could potentially disrupt traditional banking deposit bases, which form the foundation of mortgage lending in Britain’s commercial bank-dominated system.

The regulatory push comes amid cautious market sentiment toward stablecoin growth. According to CoinGecko data, the total market cap of all stablecoins currently sits above $311 billion, yet a majority of users on prediction market Myriad expect it will fall short of $360 billion before next February. This tempered outlook reflects broader market uncertainty as regulatory frameworks take shape on both sides of the Atlantic, with market participants weighing the potential for increased institutional adoption against regulatory constraints.

Britain’s approach represents a careful balancing act between fostering innovation in its crucial financial services sector and maintaining financial stability in a system where commercial banks play a central role in credit provision. As Howard noted, given Britain’s history as a center for foreign currency exchange, the stablecoin regulatory framework represents both a challenge and opportunity to maintain the UK’s position in global financial markets while adapting to new digital asset classes.