Bank of England Eases Stablecoin Rules and Sets £40 Billion Issuance Limit

Highlights:

• The Bank of England removed proposed ownership caps and replaced them with a £40 billion issuance limit for systemic stablecoins.
• The Bank of England stablecoin framework allows issuers to hold up to 70% of reserves in short-term government debt.
• Regulators expect regulated sterling-backed stablecoins to begin operating in the UK market from next year.

The Bank of England on Monday removed proposed limits on individual and business holdings of sterling-backed stablecoins, according to Reuters. Instead, the central bank introduced a £40 billion issuance limit for each systemic sterling-backed stablecoin under its final policy framework.

JUST IN: Bank of England Softens Stablecoin Rules, Scraps Individual Holding Caps

The Bank of England has published its final policy framework and draft rules for systemic stablecoins, easing several proposals from last year’s consultation. The central bank scrapped plans to cap… pic.twitter.com/xAZaOgZAJH

— Wu Blockchain (@WuBlockchain) June 22, 2026

The framework applies only to systemic stablecoins that could affect financial stability because of their size or market importance. The bank published the changes in its final policy statement and draft code of practice for systemic stablecoin issuers.

The decision marks a major shift from proposals released in November last year. At that time, the bank planned to limit individuals to holding no more than £20,000 of a single UK stablecoin. The proposal also sought to cap business holdings at about £10 million per systemic stablecoin.

Bank officials introduced those limits because they feared widespread stablecoin adoption could move deposits away from commercial banks. Officials warned that large deposit shifts could reduce bank lending and increase borrowing costs across the UK economy.

However, the bank changed course after months of consultations with stablecoin issuers, payment firms, legal advisers, and digital asset companies. After reviewing industry feedback, officials concluded that a £40 billion issuance cap could address the same concerns more effectively. The bank said the issuance guardrail achieves the same objective as ownership limits by controlling overall stablecoin growth without restricting individual users.

Bank of England Stablecoin Framework Responds to Industry Concerns

The Bank of England developed the final framework after months of consultations with market participants. During those discussions, industry participants argued that ownership caps and reserve requirements could slow the growth of the sterling stablecoin market. Many firms said they could not easily track stablecoin holdings across multiple wallets, exchanges, and payment platforms.

Several companies also warned that compliance could require costly monitoring systems and extensive coordination between service providers. Critics said the ownership caps could discourage issuance and make UK stablecoins less competitive than products available in other jurisdictions.

The bank also revised reserve asset requirements after reviewing feedback from market participants. Under the final framework, issuers can hold up to 70% of reserve assets in short-term UK government debt. Earlier proposals limited that allocation to 60% and required at least 40% of reserves to remain at the Bank of England.

JUST IN: 🇬🇧 Bank of England to scale back plans for strict stablecoin rules following crypto industry pressure.

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The new stablecoin framework requires issuers to keep the remaining 30% of reserves in non-interest-bearing deposits at the Bank of England. The bank said those deposits help issuers meet redemption requests quickly during periods of market stress.

Digital Payments Strategy Advances Toward 2027 Rollout

The policy statement by the Bank of England said the framework supports safe innovation and allows UK-issued stablecoins to develop as trusted forms of digital money. The bank also said stablecoins could support programmable payment functions alongside faster domestic and cross-border transactions. The stablecoin framework forms part of the UK’s broader digital payments strategy. That strategy includes tokenized bank deposits, tokenized securities, and a possible retail central bank digital currency.

Recently, the Bank of England and the Financial Conduct Authority requested feedback on proposed rules for tokenized securities and digital market infrastructure. At the same time, the Bank-FCA Digital Securities Sandbox is preparing for commercial launches involving participating firms.

Under the framework, non-systemic stablecoins will remain under FCA supervision, while systemic issuers will move into Bank of England oversight. The current draft framework remains open for feedback until September 22. The Bank expects regulated sterling-backed stablecoins to begin operating in the UK from next year.