Innovate Finance Warns Bank of England Proposals Could Kill GBP Stablecoins and Raise ‘Dollarisation’ Risk

Sterling stablecoins are digital payment instruments backed by pound-denominated assets to maintain a one-to-one value. They are central to the United Kingdom’s monetary sovereignty in cross-border payments and tokenized markets. The Bank of England proposed a regulatory framework on November 10, 2025, that would cap individual holdings at £20,000 and corporate holdings at £10 million, while requiring issuers to place 40% of reserves at the central bank without earning interest.

On March 4, 2026, Innovate Finance Chief Strategy Officer Adam Jackson told the House of Lords that the current proposal would make sterling stablecoins difficult to invest in. The group also criticized same-day redemption requirements and a ban on issuance by British commercial banks. It warned that without changes, dollar-denominated assets such as USDT and USDC could dominate digital payments in the United Kingdom, leading to “dollarisation.”