The Bank of England is working on the creation of exemptions to its proposed limits on corporate stablecoin holdings, according to a report by Bloomberg earlier today. This comes as the UK responds to pressures to keep up with the US on crypto. 

The Central Bank is likely to issue exemptions to some users of corporate stablecoins, especially crypto exchanges that will be required to hold and use large amounts of stablecoins.

The Bank of England will also allow the use of stablecoins as settlement assets in its Digital Securities Sandbox.

A shift in policy approach

This is a notable change in the attitude of Governor Andrew Bailey, who recently indicated that stablecoins might be able to coexist with other traditional forms of finance. 

In his opinion piece to the Financial Times, Bailey admitted that it is essential to approve of at least some forms of stablecoins in order the improve the payment system in and outside of the UK, and that it would be a mistake to reject them entirely.

He asserts that the ultimate impact of stablecoins on payment systems will come about only if they can earn and keep the trust of the users.

Also Read: Bank Of England Intensifies Scrutiny Over Crypto Activities, Requests Firms’ Disclosures By March

Limitations Caps

Earlier proposals from the central bank included strict limits on stablecoin ownership. These caps were set at £20,000 ($26,832) for individuals and £10,000,000 ($13,400,000) for businesses. 

These limits are expected to be further detailed in a consultation planned for later this year. The initial draft was seen as one of the most cautious approaches among major economies, reflecting the UK’s intent to maintain control while exploring digital asset use.

Industry reaction and regulatory balance

The crypto industry has voiced strong concerns since the announcement of the proposed limits. Many payments and digital asset groups warned that such restrictions could weaken innovation and drive companies abroad. 

They argue that the UK must balance safety and progress if it wants to stay competitive with markets like the United States.

In the United States, regulators recently passed the GENIUS Act under the Trump administration, setting out a framework for dollar-backed stablecoins. Supporters of this legislation say it provides clarity for businesses and investors.

In contrast, the UK’s plan has been viewed as more restrictive, leading to fears that the nation could lose its edge as a financial hub for blockchain technology.

Exemptions and sandbox plans

As per the latest proposal, a few businesses might work beyond the intended limits. Waivers allowing crypto exchanges and settlement firms more stablecoin access are likely. Within the Digital Securities Sandbox, these assets can be used as settlement tools. 

This initiative forms part of the Bank of England’s Strategy, aimed at testing digital financial systems under controlled conditions. There are digital systems. It is understood that these are working towards adaptable frameworks with real-world applications and real-world financial systems.

Trust maintenance

Trust and reliability are the main subjects in the communication of the Bank, and this is emphasised. Thanks to the remarks made by Governor Bailey and other Bank officials, this is clear. 

In his response, Governor Bailey also pointed out that, while stablecoins could improve the efficiency of cross-border transactions, the systems would need more rigorous user protection standards. 

This includes backing of evaluative, governance, and operational transparency. Here, the Bank tries to strike a balance of innovating for the other systems with digital assets while protecting the financial systems in place.

Also Read: Bank of England Mulls Crypto Exposure Limits for UK Banks by 2026