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    Thursday, January 22
    On a grey Monday in November 2025, the Bank of England dropped what felt less like a policy announcement and more like a quiet boundary line—subtle, deliberate, and unmistakably strategic. Behind the numbers and acronyms, a message came into focus: digital money will grow, but only under careful supervision. The stablecoin rules weren’t overly dramatic, but their structure spoke volumes. Issuers can now invest up to 60% of their assets in short-term UK government debt. That’s not exactly thrilling, but for a sector long wary of restrictions, it’s a notably improved position. Previously, the Bank had considered forcing all reserves into non-interest-bearing accounts—effectively draining the life from stablecoins’ economic model. By softening that stance, the BoE acknowledged something fundamental: innovation cannot be suffocated into safety. The remaining 40% must still be parked in central bank accounts, but allowing that other portion to generate yield feels like a nod toward sustainability rather than just surveillance. What gives the policy its teeth, however, are the holding caps. Individuals can own no more than £20,000 in systemic stablecoins, while businesses are limited to £10 million—unless granted an exemption. These numbers weren’t chosen arbitrarily. They are clearly designed to slow the pace of capital migration out of traditional banking and into tokenized assets. For me, that cap instantly brought to mind a 2018 lunch with a fintech founder in Shoreditch who warned that if regulators ever feared losing grip, they’d “cut the cord with velvet gloves.” This feels precisely like that. The BoE framed the limits as temporary, promising to lift them once stability is assured. Yet in practice, such caps operate as economic circuit breakers. They don’t stop innovation—but they force it to flow in narrower, more predictable channels. Still, the approach is particularly innovative in one respect: it integrates stablecoins into the UK’s payment ecosystem without demanding they become carbon copies of commercial banks. Issuers considered systemic can access a transitional window—investing up to 95% of reserves in gilts—if they’re migrating from FCA regulation. It’s an unusually generous move that reflects not just flexibility, but strategic timing. By offering this bridge, the BoE effectively invites fintechs to step inside its regulatory architecture rather than circle it from afar. For companies that have waited years for consistent rules, that’s an incredibly versatile opportunity. Of course, not all stakeholders are satisfied. Tom Duff Gordon from Coinbase called the cap too restrictive and pushed for 80% allocation into high-quality liquid assets. His concern is understandable. If stablecoin issuers can’t match traditional returns, why would firms park serious capital in them? At the same time, the central bank has floated the idea of offering liquidity support during periods of stress. That’s a subtle but significant shift. In moments of volatility, systemic issuers could turn to the BoE for emergency funding. It’s a mechanism strikingly similar to how traditional banks are protected—offering credibility without granting full equivalence. This backstop makes it exceptionally clear that the Bank isn’t just tolerating stablecoins—it’s preparing to stabilize them. Perhaps most crucially, the regulation draws a clean line between payment-focused tokens and crypto-trading assets. The former fall under the BoE’s eye; the latter remain in the FCA’s domain. This distinction allows the Bank to focus on monetary impact without getting pulled into debates over speculative tokens or meme-driven volatility. There’s an efficiency in that separation that’s hard to ignore. It helps the BoE remain highly efficient while still expanding its oversight of systemic risk. It also gives crypto lenders a transparent pathway—something many have craved for years. I was quietly struck by the measured tone of Sarah Breeden, the Bank’s deputy governor. “We’ve listened carefully to feedback,” she said, a line that might seem routine, but in the context of central bank communication, it lands with intention. She wasn’t just presenting new rules. She was signaling a philosophical shift. Through this lens, the Bank’s move doesn’t just look like regulation—it looks like repositioning. The UK has often trailed other jurisdictions in crypto innovation, but this plan might help it leap ahead—not with flash, but with structure. By leveraging its credibility, the BoE is anchoring stablecoin growth in something steadier than tech buzz: trust. That shift, while quiet, is remarkably effective. Over the past year, as other countries raced to stake out crypto ground, the UK has watched and waited. Now, rather than competing on deregulation, it’s betting on institutional adoption. Not fast, but deep. Not loud, but lasting. The consultation remains open until February, but the tone has already been set. This isn’t a one-off adjustment. It’s the start of a long, careful choreography between government money and private code. Crypto lenders, for all their entrepreneurial daring, are being asked to waltz rather than sprint. But in exchange, they’re being offered access to the grandest financial ballroom in the country. And if the Bank continues to regulate like this—with soft touches, hard lines, and unspoken urgency—it might just turn its velvet gloves into a firm but fair grip on digital money’s future.
    On a grey Monday in November 2025, the Bank of England dropped what felt less like a policy announcement and more like a quiet boundary line—subtle, deliberate, and unmistakably strategic. Behind the numbers and acronyms, a message came into focus: digital money will grow, but only under careful supervision. The stablecoin rules weren’t overly dramatic, but their structure spoke volumes. Issuers can now invest up to 60% of their assets in short-term UK government debt. That’s not exactly thrilling, but for a sector long wary of restrictions, it’s a notably improved position. Previously, the Bank had considered forcing all reserves into non-interest-bearing accounts—effectively draining the life from stablecoins’ economic model. By softening that stance, the BoE acknowledged something fundamental: innovation cannot be suffocated into safety. The remaining 40% must still be parked in central bank accounts, but allowing that other portion to generate yield feels like a nod toward sustainability rather than just surveillance. What gives the policy its teeth, however, are the holding caps. Individuals can own no more than £20,000 in systemic stablecoins, while businesses are limited to £10 million—unless granted an exemption. These numbers weren’t chosen arbitrarily. They are clearly designed to slow the pace of capital migration out of traditional banking and into tokenized assets. For me, that cap instantly brought to mind a 2018 lunch with a fintech founder in Shoreditch who warned that if regulators ever feared losing grip, they’d “cut the cord with velvet gloves.” This feels precisely like that. The BoE framed the limits as temporary, promising to lift them once stability is assured. Yet in practice, such caps operate as economic circuit breakers. They don’t stop innovation—but they force it to flow in narrower, more predictable channels. Still, the approach is particularly innovative in one respect: it integrates stablecoins into the UK’s payment ecosystem without demanding they become carbon copies of commercial banks. Issuers considered systemic can access a transitional window—investing up to 95% of reserves in gilts—if they’re migrating from FCA regulation. It’s an unusually generous move that reflects not just flexibility, but strategic timing. By offering this bridge, the BoE effectively invites fintechs to step inside its regulatory architecture rather than circle it from afar. For companies that have waited years for consistent rules, that’s an incredibly versatile opportunity. Of course, not all stakeholders are satisfied. Tom Duff Gordon from Coinbase called the cap too restrictive and pushed for 80% allocation into high-quality liquid assets. His concern is understandable. If stablecoin issuers can’t match traditional returns, why would firms park serious capital in them? At the same time, the central bank has floated the idea of offering liquidity support during periods of stress. That’s a subtle but significant shift. In moments of volatility, systemic issuers could turn to the BoE for emergency funding. It’s a mechanism strikingly similar to how traditional banks are protected—offering credibility without granting full equivalence. This backstop makes it exceptionally clear that the Bank isn’t just tolerating stablecoins—it’s preparing to stabilize them. Perhaps most crucially, the regulation draws a clean line between payment-focused tokens and crypto-trading assets. The former fall under the BoE’s eye; the latter remain in the FCA’s domain. This distinction allows the Bank to focus on monetary impact without getting pulled into debates over speculative tokens or meme-driven volatility. There’s an efficiency in that separation that’s hard to ignore. It helps the BoE remain highly efficient while still expanding its oversight of systemic risk. It also gives crypto lenders a transparent pathway—something many have craved for years. I was quietly struck by the measured tone of Sarah Breeden, the Bank’s deputy governor. “We’ve listened carefully to feedback,” she said, a line that might seem routine, but in the context of central bank communication, it lands with intention. She wasn’t just presenting new rules. She was signaling a philosophical shift. Through this lens, the Bank’s move doesn’t just look like regulation—it looks like repositioning. The UK has often trailed other jurisdictions in crypto innovation, but this plan might help it leap ahead—not with flash, but with structure. By leveraging its credibility, the BoE is anchoring stablecoin growth in something steadier than tech buzz: trust. That shift, while quiet, is remarkably effective. Over the past year, as other countries raced to stake out crypto ground, the UK has watched and waited. Now, rather than competing on deregulation, it’s betting on institutional adoption. Not fast, but deep. Not loud, but lasting. The consultation remains open until February, but the tone has already been set. This isn’t a one-off adjustment. It’s the start of a long, careful choreography between government money and private code. Crypto lenders, for all their entrepreneurial daring, are being asked to waltz rather than sprint. But in exchange, they’re being offered access to the grandest financial ballroom in the country. And if the Bank continues to regulate like this—with soft touches, hard lines, and unspoken urgency—it might just turn its velvet gloves into a firm but fair grip on digital money’s future.
    AI

    Bank of England’s Stealth Plan to Rein in Crypto Lenders

    News TeamBy No Comments5 Mins Read

    The Bank of England made what felt more like a quiet boundary line—subtle, purposeful, and obviously strategic—than a policy announcement on a gray Monday in November 2025. A message emerged from the numbers and acronyms: digital money will expand, but only under strict oversight.

    The structure of the stablecoin rules said a lot, even though they weren’t very dramatic. It is now possible for issuers to allocate as much as 60% of their assets to short-term UK government debt. That’s not particularly exciting, but it’s a significantly better position for a sector that has long been wary of restrictions. The Bank had previously thought of transferring all reserves into accounts that did not pay interest, thereby killing the stablecoins’ business model.

    Key AreaDetails
    Regulatory BodyBank of England (BoE)
    Scope of RegulationSterling-denominated systemic stablecoins
    Investment LimitsUp to 60% in UK short-term government debt; 40% in unremunerated BoE accounts
    Individual Holding Cap£20,000
    Business Holding Cap£10 million (exemptions for large firms possible)
    Transition ProvisionUp to 95% in government debt for issuers shifting from FCA oversight
    Liquidity SupportCentral bank may offer backstop liquidity during market stress
    Oversight DistinctionBoE for systemic coins; FCA for crypto-exchange utility coins
    Consultation DeadlineFebruary 10, 2026
    ReferenceReuters: Bank of England Stablecoin Regulation (2025)

    The BoE recognized something essential by easing that position: innovation cannot be stifled in the name of safety. Allowing the remaining 40% to produce yield feels more like a step toward sustainability than merely surveillance, even though the remaining 40% must still be kept in central bank accounts.

    The holding caps, however, are what give the policy its teeth. Systemic stablecoin ownership is restricted to £20,000 for individuals and £10 million for businesses, unless an exemption is granted. These figures weren’t picked at random. They are obviously intended to slow the rate at which capital is moving from traditional banking to tokenized assets.

    That cap immediately reminded me of a Shoreditch lunch with a fintech founder in 2018, who threatened to “cut the cord with velvet gloves” if regulators ever feared losing control. That’s exactly how this feels.

    The BoE stated that the restrictions were only temporary and that they would be lifted as soon as stability was guaranteed. However, in reality, these caps function as cost-effective circuit breakers. They make innovation go through more regulated, predictable channels, but they don’t stop it.

    However, the strategy is unique in one way: it incorporates stablecoins into the UK payment system without requiring them to replicate commercial banks exactly. If an issuer is moving away from FCA regulation, they can take advantage of a transitional window that allows them to invest up to 95% of their reserves in gilts. It’s a remarkably giving gesture that exhibits both strategic timing and flexibility.

    The BoE essentially invites fintechs to enter its regulatory architecture rather than circumnavigating it by providing this bridge. That is a very flexible opportunity for businesses that have been waiting years for consistent regulations.

    Naturally, not every stakeholder is happy. Coinbase’s Tom Duff Gordon advocated for an 80% allocation to high-quality liquid assets, calling the cap excessively restrictive. It makes sense that he would be concerned. Why would businesses invest significant capital in stablecoin issuers if they can’t match traditional returns?

    Simultaneously, the central bank has proposed providing liquidity support in times of stress. It’s a small but important change. Systemic issuers may seek emergency funding from the BoE during volatile times. It’s a mechanism that offers credibility without granting full equivalency, which is remarkably similar to how traditional banks are protected.

    This backstop makes it very evident that the Bank is planning to stabilize stablecoins rather than merely accepting them.

    The rule clearly distinguishes between tokens intended for payments and assets used for cryptocurrency trading, which is perhaps its most important feature. The former are under the BoE’s purview, while the latter are still under the FCA’s purview. Because of this distinction, the Bank is able to concentrate on monetary impact without becoming entangled in discussions about meme-driven volatility or speculative tokens.

    It’s difficult to overlook the efficiency of that separation. It enables the BoE to continue being extremely effective while broadening its systemic risk supervision. Additionally, it provides a transparent pathway for cryptocurrency lenders, which many have long desired.

    The calm demeanor of Sarah Breeden, the deputy governor of the Bank, subtly impressed me. In the context of central bank communication, her statement, “We’ve listened carefully to feedback,” may seem ordinary, but it has purpose. She wasn’t merely introducing new regulations. She was indicating a change in perspective.

    From this perspective, the Bank’s action appears to be repositioning rather than merely regulation. In terms of cryptocurrency innovation, the UK has frequently lagged behind other countries, but this plan could help it advance—not with flash, but with structure.

    The BoE is using its credibility to anchor stablecoin growth in trust, which is more stable than tech buzz. Even though that shift is quiet, it works incredibly well.

    The UK has watched and waited over the past year as other nations have rushed to establish their presence in the cryptocurrency space. It is now placing a wager on institutional adoption rather than competing on deregulation. Deep, but not quick. Long-lasting but not loud.

    The tone has already been established, but the consultation is still open until February. This is not a one-time change. It marks the beginning of a protracted, meticulous dance between public funds and private code.

    Despite their entrepreneurial courage, cryptocurrency lenders are being asked to waltz instead of run. However, they are being given access to the nation’s largest financial ballroom in return.

    And the Bank might just transform its velvet gloves into a firm but equitable grip on the future of digital money if it keeps regulating in this way—with gentle touches, firm lines, and an unspoken urgency.

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