A House of Lords committee has told the Bank of England to rethink stablecoin caps before the UK's regime is finalized. The Financial Services Regulation Committee published its report, Stablecoins: waiting for regulation, on June 3, 2026, turning a technical debate over reserve design into a test of whether the UK can build a pound-denominated stablecoin market without making it uneconomic from the start.
The Signal
The pressure point is the design of the safeguards. The committee supports 1:1 backing and accepts that stablecoins can create risks around financial stability, consumer protection, and illicit finance. Its challenge is more specific: the Bank's proposed safeguards may be calibrated for a market that does not yet exist in the UK. Two measures sit at the center of that critique.
The Bank has proposed temporary per-coin holding limits of £20,000 for individuals and £10 million for businesses. It has also proposed requiring systemic sterling stablecoin issuers to keep at least 40% of backing assets as deposits at the Bank of England that do not earn interest. The Lords report says those choices could shape whether a GBP stablecoin market develops at all. If a pound stablecoin cannot be held in useful amounts or generate enough reserve income to support the issuer's business, the UK could end up with clear rules, but few firms willing to build the products those rules are meant to govern.
“The UK could end up with clear rules, but few firms willing to build the products those rules are meant to govern.”
