The Bank of England has made some welcome improvements to its stablecoin framework, but the overall policy still appears designed to ensure that UK-based stablecoin issuers cannot succeed. Here's why: Scrapping the proposed £20,000 cap on individual stablecoin holdings was an obvious and necessary step (well done from the industry for winning this) However, the BoE still requires issuers to hold 30% of their reserves in a non-interest-bearing account at the central bank. This destroys the economics of issuing stablecoins in the UK and effectively pushes issuers offshore. Think about it: today, PSPs and EMIs can invest customer funds in highly liquid, low-volatility assets and earn a return. If 30% of reserves earn nothing and are steadily eroded by inflation, there is little incentive for PSPs or EMIs to adopt stablecoins as the underlying infrastructure for payments. The economics simply do not work as this is simply a tax for stablecoin issuers. Use-cases will be limited. Even if an issuer manages to succeed despite these constraints, they would be capped at £40 billion in issuance. For comparison, Revolut already holds around £65 billion in customer assets that could potentially be tokenised into stablecoins. And that ignores the opportunity in emerging markets, where a pound-denominated stablecoin could provide meaningful protection against local currency depreciation. The BoE needs to stop treating stablecoins as some kind of alien threat. From a technical pov, there is very little difference between registering these balances in a Postgres database, as EMIs do today or representing those same balances onchain (except the latter is more transparent, auditable and resilient ledgering system). Regulation should be technologically neutral. For UK to succeed, the policy needs to make sense for the issuers to have an incentive to adopt and the policy needs to adopt to a world-wide scale. UK won't be able to compete with US with these restrictive policies and this would lead to more offshoring.(Stani)