The Bank of England is setting the stage for a big change in how British banks interact with cryptocurrencies. Starting in 2026, banks will face new limits on how much digital asset exposure they can take on. The move is part of a wider push to reduce risk and keep the traditional financial system from being rattled by crypto’s ups and downs. Transparency is an important part of the Bank of England crypto framework, with banks required to disclose their crypto activity in detail.
Why Banks Are Being Pulled Back from the Edge
David Bailey, director of prudential policy at the Bank of England, explained the thinking behind the restrictions. In short, volatile assets like Bitcoin are too unpredictable to form a big chunk of a bank’s portfolio. Bailey called for a “conservative approach,” saying banks need to manage crypto in a way that protects both themselves and their customers.
BREAKING: The Bank of England is taking steps to restrict cryptocurrency activities for commercial banks, aiming to promote financial stability across the UK.
Aimed at minimizing risks and ensuring a stable financial system.#Crypto #BankOfEngland #Finance #UK… pic.twitter.com/S8wlWC03o8
— Crypto News Hunters
(@CryptoNewsHntrs) June 19, 2025
One Percent Is the Magic Number
Under the proposal, UK banks would be expected to cap their holdings of cryptocurrencies at just one percent of their total assets. That’s a number coming straight from the Basel Committee, the global group that sets banking standards. The idea is to give crypto some room without letting it throw off the financial balance sheet.
More Reporting, More Transparency
It is not just about limits. Banks will also have to be more transparent. A new set of disclosure rules will roll out around the same time, requiring banks to share details about how much crypto they hold and in what form. That way, regulators and the public can see exactly how much risk is being taken on and where it’s coming from.
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The FCA Is Covering the Consumer Side
The Financial Conduct Authority is working in parallel to set rules for how regular people interact with crypto. Some of the upcoming rules could ban borrowing money to buy crypto, put limits on lending and staking, and require platforms to step up compliance. These changes are all aimed at reducing the chance that people lose money they can’t afford to lose.
Why This Is Happening Now
The timing is no coincidence. After the collapses of Silvergate and Silicon Valley Bank, both of which had deep ties to crypto clients, regulators around the world got a serious wake-up call. The UK wants to be ahead of the next crisis, not reacting to it after the fact.
A Bigger Regulatory Puzzle
These upcoming bank rules are part of a wider plan. The UK is already setting up full regulations for crypto exchanges and trading platforms by 2026. The goal is to treat crypto like any other part of the financial system, with all the same responsibilities and guardrails.
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What This Means for the Banks
Banks may dial back their crypto plans, focusing instead on services that carry less risk. That could mean helping clients store digital assets, process stablecoin payments, or work with blockchain in more controlled environments. They will also need to update their internal systems to meet new risk standards.
What to Expect Next
The Bank of England plans to release draft rules for public comment before finalizing anything. In the meantime, banks are expected to prepare by reviewing their crypto exposure and getting ready to comply. On the consumer side, the FCA’s new restrictions should land sometime next year.
Looking Forward
The UK is not banning crypto, but it is certainly setting firmer boundaries. These new rules aim to let the technology develop without putting the financial system in danger. If regulators strike the right balance, the UK could become a model for responsible crypto integration.
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Key Takeaways
- The Bank of England will limit UK banks’ crypto holdings to 1% of total assets starting in 2026.
- The rule aims to reduce volatility risk and keep crypto from destabilizing traditional financial institutions.
- Banks will face new disclosure requirements, making their crypto exposure more transparent to regulators and the public.
- The FCA is working on consumer-facing rules that may restrict lending, staking, and leveraged crypto purchases.
- These rules are part of the UK’s broader effort to integrate crypto into the financial system with strict oversight.
The post UK to Cap Bank Crypto Holdings at 1 Percent by 2026 appeared first on 99Bitcoins.
