Lawmakers Say Bank of England Stablecoin Proposals Will ‘Limit Adoption, Push Activity Overseas’
A cross-party group of UK lawmakers has urged Chancellor Rachel Reeves to intervene in the Bank of England’s (BOE) proposed framework for stablecoins, warning that the current approach could make the UK a “global outlier” and drive digital asset activity offshore.
In a letter addressed to Reeves, the lawmakers said they are “deeply concerned that the UK is drifting towards a fragmented and restrictive approach that will deter innovation, limit adoption, and push activity overseas.”
The signatories argue that stablecoins are already becoming a “pillar of the digital economy”, and that the UK’s rules should support the development of pound-denominated digital money infrastructure rather than discourage it.
The lawmakers’ concerns focus on several parts of the BOE’s draft proposals, including restrictions they say would undermine the competitiveness of pound-backed stablecoins.
- A proposed holding cap of £20,000 for stablecoin users, applying to citizens and businesses
- Rules that would restrict most wholesale use of stablecoins to activity inside the Digital Securities Sandbox
- A prohibition on paying interest on reserves
- Reserve requirements that the lawmakers described as “impractical”
According to the letter, these measures could leave pound-backed stablecoins at a structural disadvantage, pushing users toward dollar-pegged alternatives such as USDT and USDC, which already dominate much of global on-chain stablecoin activity.
The lawmakers also argued that the proposals would not meaningfully protect the financial system. Instead, they said, the outcome would likely be increased reliance on offshore, dollar-based stablecoins, weakening the UK’s ability to build and govern domestic digital money rails.
The dispute highlights a broader tension in UK crypto policy: how to encourage innovation and maintain London’s role as a global financial center while addressing risks that regulators associate with new payment instruments and tokenized money.
The letter frames the BOE’s approach as misaligned with the government’s stated ambition to position the UK as a leading jurisdiction for digital assets, warning that overly restrictive design choices could push innovation and capital to other markets.