The Bank of England is reconsidering key aspects of its proposed regulatory framework for pound sterling stablecoins after industry feedback warned that ownership caps and reserve requirements could hinder adoption. Deputy Governor Sarah Breeden told the Financial Times that the central bank is exploring alternatives to temporary holding limits and reassessing whether its demand that at least 40% of backing assets be held as non-interest-bearing deposits is too conservative. The move signals a potential shift in the UK’s approach to digital asset regulation as policymakers aim to balance innovation with financial stability.
Bank of England reconsiders strict stablecoin regime
The BoE’s November 2025 consultation paper proposed detailed ownership limits for systemic sterling-denominated stablecoins, building on options first outlined in a 2023 discussion paper. Under that proposal, individuals would be restricted to holding up to 20,000 pounds (approximately $27,000) of a given UK stablecoin, while businesses would face a cap of roughly $13.5 million during an initial transition period. Industry participants argued these limits would make UK-issued tokens uneconomical and stifle adoption, particularly as dollar-backed stablecoins dominate the roughly $300 billion global market. Sterling-pegged tokens currently represent a negligible share of that total. The BoE’s willingness to reconsider these caps suggests a recognition that overly stringent rules could undermine the UK government’s ambition to position Britain as a competitive hub for digital assets.
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US banks see tokenization starting ‘slow, then fast’
Major US banks expect the transition to a digitized financial system to accelerate over time, with tokenization expanding to more market participants, assets, and use cases, according to a Moody’s report published Tuesday. The credit rating agency noted that industry leaders broadly believe broad asset tokenization is inevitable, with the main uncertainties centered on timing and sequencing. Moody’s outlined three possible outcomes for the financial system depending on the pace of tokenization, ranging from gradual integration to rapid transformation. Current tokenization activity remains low, but almost all large banks and major financial market intermediaries have established dedicated digital-asset teams or innovation units and are participating in industry pilots. The trend is expected to be a windfall for the broader crypto market, with ARK Invest projecting the crypto market could reach $28 trillion by 2030, driven by Bitcoin, decentralized finance, stablecoins, and tokenized assets.
Polymarket monthly volume falls for first time since August
Monthly trading volume on the Polymarket prediction market declined by approximately 8.9% in April, marking the first month-over-month drop since August 2025, according to data from Dune Analytics. Polymarket and its US-based trading application generated more than $10.2 billion in volume in April, down from more than $11.2 billion in March. Meanwhile, rival Kalshi saw its April trading volume surge by about 13% to approximately $14.8 billion, capturing a larger share of the growing prediction market sector. Total monthly trading volume across all prediction markets increased to about $29.8 billion in April from about $26.5 billion in March, representing a 12.4% rise, indicating continued overall market expansion despite Polymarket’s temporary slowdown.
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Conclusion
The developments underscore a important moment for digital asset regulation and adoption. The Bank of England’s willingness to reconsider its stablecoin framework reflects the delicate balance between promoting innovation and maintaining financial stability. Simultaneously, the tokenization trend gaining traction among major US banks signals a structural shift in how traditional finance views digital assets. The prediction market data adds a layer of competitive dynamics, showing that while the sector is growing, leadership positions can shift rapidly. Together, these stories highlight the evolving sector of crypto regulation, institutional adoption, and market competition.
FAQs
Q1: Why is the Bank of England reconsidering its stablecoin rules?
The BoE is responding to industry backlash over proposed ownership caps and reserve requirements that critics say would make UK-issued stablecoins uneconomical and stifle adoption. Deputy Governor Sarah Breeden indicated the central bank is exploring alternatives to temporary holding limits and reassessing the 40% non-interest-bearing deposit requirement.
Q2: What does ‘slow, then fast’ mean for tokenization in US banks?
Moody’s report suggests that while tokenization activity is currently low, major banks expect adoption to accelerate rapidly once infrastructure and regulatory frameworks mature. Almost all large banks have established digital-asset teams and are participating in industry pilots, indicating preparation for a broader shift.
Q3: Why did Polymarket’s monthly trading volume decline in April?
Polymarket’s volume fell about 8.9% month-over-month to $10.2 billion in April, its first decline since August 2025. The drop coincided with rival Kalshi’s 13% volume surge to $14.8 billion, suggesting increased competition in the prediction market space, though total market volume still grew 12.4% overall.
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