UK Stablecoin Rules Face Lawmaker Pushback

Bank of England caps draw scrutiny

Sarah Breeden, the Bank’s deputy governor for financial stability, told the committee in March that the UK relies far more heavily on banks for household credit than the US does. Her concern was that if deposits moved quickly into payment stablecoins and banks could not replace that funding, credit availability for households and businesses could decline.

The Bank of England described holding limits as temporary tools to protect credit access while the financial system adjusts to new forms of money. The committee said those caps should not be imposed before risks are visible, warning that limits could be commercially damaging and technically difficult to enforce if users hold tokens across multiple wallets, platforms, custodians or automated payment tools.

The committee said no other jurisdiction currently imposes holding limits of this kind, making the Bank’s proposal unusually restrictive compared with international competitors. Lawmakers recommended that the Bank monitor market growth first and impose limits only if clear financial-stability risks appear.

Baroness Noakes DBE, committee chair, said the global stablecoin market is dominated by US-dollar tokens and “evolved to serve crypto asset trading.” She said the UK is “lagging behind” the US and EU but “now moving in the right direction.”

Baroness Noakes DBE also said regulation must allow innovation while ensuring risks are mitigated. The committee urged the Bank of England to reconsider whether deposits held at the Bank should be paid at Bank Rate, rather than treated as non-yielding assets.

The committee also pushed for a more flexible, principles-based model for backing assets. Lawmakers said rigid reserve rules could lock the UK into assumptions before regulators have enough evidence on how sterling stablecoins would be used in real markets.

HM Treasury was urged to clarify when a stablecoin becomes systemic, because that designation determines when an issuer moves from the FCA-led non-systemic framework into dual oversight by the Bank of England and the FCA. The committee recommended that HM Treasury publish quantitative thresholds so issuers can plan before investing in products, reserves, compliance systems and distribution.

The FCA’s consultation covers stablecoin issuance and crypto custody for the non-systemic side of the regime, while the Bank of England’s rules would apply once a sterling stablecoin becomes systemic. The committee said uncertainty around the transition could make scaling a regulatory risk for issuers.

The committee also criticized restrictions on commercial banks issuing stablecoins. The PRA’s approach would confine bank stablecoin issuance to insolvency-remote entities under distinct branding, separating the stablecoin product from the bank’s main balance sheet and identity.

Lawmakers also urged the FCA to review its k-factor capital requirement, saying it scales with stablecoin circulation rather than issuer risk. The committee warned that a capital rule tied mechanically to issuance volume could limit GBP stablecoin growth at the point when the UK needs scale to compete with dollar-denominated tokens.

The committee called on HM Treasury, the FCA and the Bank of England to jointly assess whether existing legal frameworks are strong enough to detect and deter illicit activity through private “unhosted” wallets. If current laws are insufficient, lawmakers said legislation restricting private unhosted wallet use should be prepared if necessary.

The committee said there was relatively little demand for issuers to pay interest directly on stablecoins. It also warned that rewards, rebates and other incentives could affect whether a GBP stablecoin market develops, because payment products may need commercial tools to compete.

UK stablecoin policy is being shaped around cross-border payments, tokenized settlement, programmable payments and stronger payment competition. The committee’s concern is that strict holding caps and low-yield reserve rules could make regulated sterling stablecoins less viable, leaving users and businesses to rely on US-dollar tokens or alternatives outside the systemic regime.

FCA warns clubs over crypto sponsors

The FCA separately warned Premier League clubs and other football teams to avoid sponsorship deals with unauthorized financial firms, including crypto businesses and online trading platforms.

The FCA said several unauthorized firms are using football sponsorships to target “unwitting” supporters. It warned that firms operating without authorization may be breaching UK financial services law and said fans using them “risk losing all their money.”

The regulator wrote directly to football clubs, telling them that sponsorships with unauthorized financial firms could expose teams to legal liability, money-laundering risks and reputational damage if proper checks are not carried out. The FCA said it expects UK clubs to conduct proper and ongoing due diligence on financial-services sponsors.

The FCA said it will take action where concerns have already been identified. The warning makes clear that sponsor logos and stadium branding are not being treated as neutral exposure if they promote firms tied to regulated or high-risk financial products.

The FCA said a firm not authorized in the UK can promote financial products or services to consumers only if its adverts are approved by an authorized firm under the financial promotions regime. The regulator has been applying that regime to crypto marketing since October 2023.

A BingX spokesperson said the company has “registered or obtained the applicable regulatory approvals to operate in countries where it provides its services.” The FCA did not respond to a request for comment by publication, while Chelsea, Manchester City, OKX and LAK3 Company were contacted but had not responded by publication time.

The FCA issued 146 alerts in the first 24 hours after its crypto financial-promotion regime went live. The regulator launched its first enforcement action under the crypto-promotion push in February 2026 against HTX, formerly Huobi, for allegedly illegal crypto promotions to UK consumers.

The FCA said it is working with the government, the Premier League and the incoming Independent Football Regulator to address questionable financial sponsorships across the sport. The football warning also followed a Gambling Commission warning over gambling adverts on children’s replica kits at Bournemouth, Fulham, Newcastle and Wolves.