Stablecoin Demand May Fade as Tokenised Deposits Rise, BoE Says - Global Banking & Finance Review — 2026-05-31

## Short Segments Stablecoins may soon face a new challenger in the world of digital finance. The Bank of England is considering alternatives to stablecoin holding limits, as tokenized deposits gain traction. Coming up, we'll explore how this shift could reshape the landscape for issuers, custodians, and payment companies. ## Feature Story The Bank of England is signaling a potential shift in the digital finance landscape, as it considers the rise of tokenized deposits over stablecoins. This development comes amid ongoing discussions about the future of stablecoin regulation in the UK. The Bank of England, led by Deputy Governor Sarah Breeden, is re-evaluating its approach to stablecoin holding limits, following industry feedback and concerns about liquidity stress. Tokenized deposits, which represent traditional bank deposits in a digital form, are gaining attention as a viable alternative to stablecoins. Unlike stablecoins, which are often backed by a mix of assets and can be subject to regulatory scrutiny, tokenized deposits are directly linked to existing bank accounts, offering a potentially more stable and regulated option for digital transactions. The Bank of England's interest in tokenized deposits is part of a broader strategy to modernize the UK's payment infrastructure. The central bank has outlined plans to accelerate the development of tokenized finance, while continuing to refine its stablecoin regulations. This includes the possibility of introducing a digital pound, which would further integrate digital assets into the UK's financial system. For issuers and custodians, the rise of tokenized deposits could mean a shift in focus from stablecoins to these new digital instruments. Payment companies and developers may also need to adapt their systems to accommodate tokenized deposits, which could offer faster and more secure transactions compared to traditional methods. Regulators, meanwhile, are tasked with ensuring that the transition to tokenized deposits does not compromise financial stability. The Bank of England is considering various approaches to manage the risks associated with stablecoins, including potential caps on issuance and alternative reserve requirements. As the Bank of England prepares to publish draft rules next month, the financial industry is watching closely. The outcome of these discussions could set a precedent for how other countries approach the regulation of digital assets and the integration of tokenized finance into their economies. In summary, the Bank of England's exploration of tokenized deposits over stablecoins marks a significant moment in the evolution of digital finance. This shift could lead to more regulated and stable digital transactions, impacting issuers, custodians, payment companies, and developers. As the UK moves towards a more tokenized financial system, the implications for global finance are profound, with potential ripple effects across markets and regulatory frameworks worldwide.