Bank of England Softens Stablecoin Cap Plan After Pushback

The Bank of England has revised its controversial stablecoin regulation framework, introducing key exemptions after facing significant pushback from the cryptocurrency industry. The central bank's modified approach to capping stablecoin holdings represents a crucial development for the UK's digital asset landscape and broader DeFi ecosystem.

Initially proposed restrictions on stablecoin accumulation sparked concerns among crypto exchanges, blockchain developers, and institutional investors who argued the caps could stifle innovation and limit market liquidity. The BoE's decision to incorporate industry feedback demonstrates growing regulatory flexibility as traditional financial institutions increasingly embrace cryptocurrency adoption.

This regulatory adjustment could have significant implications for major stablecoins like USDT and USDC operating within UK markets, potentially affecting Bitcoin and Ethereum trading volumes on domestic exchanges. The softened stance may attract more crypto businesses to London's financial district, positioning the UK competitively against other jurisdictions vying for blockchain innovation leadership.

Market participants are closely monitoring how these exemptions will be structured, as clearer stablecoin regulations could boost institutional confidence in cryptocurrency investments and support the sector's mainstream adoption across traditional finance.