What happened? The Bank of England will allow exemptions to proposed stablecoin holding caps and let stablecoins be used in its Digital Securities Sandbox.
The BoE plans to grant waivers for firms like crypto exchanges that need to hold large stablecoin balances and will permit regulated stablecoins for settlement tests in a sandbox. Officials are reworking earlier limits after industry pushback and may let systemic stablecoins hold some reserves in high-quality assets. A detailed consultation paper is expected by the end of the year outlining the final rules.
Who does this affect? Crypto exchanges, fintechs, banks, token issuers and users who rely on stablecoins for liquidity and settlement.
Exchanges and payment firms that use stablecoins for fast settlement could avoid disruptive caps that would hurt their operations. Banks and issuers testing tokenized securities in the sandbox will get clearer pathways for using regulated stablecoins. Retail investors and market infrastructure could be indirectly impacted as firms adjust how much stablecoin they hold and circulate.
Why does this matter? It could help keep liquidity and innovation in London but also reshuffle market flows between the UK, US and EU.
Softening the rules may prevent trading and capital from migrating to friendlier jurisdictions like the US, supporting London as a crypto hub. Easier use of stablecoins in settlement and pilots could increase adoption, boost transaction volumes, and lower friction in markets. At the same time, looser limits change the risk landscape, which could influence institutional demand, asset prices, and cross-border liquidity dynamics.