BoE plans supply-based caps for stablecoins

TLDR

The Bank of England plans to swap per-user holding limits on UK stablecoins for temporary caps on total supply to control risk while easing industry restraints.

1. The old plan capped individuals at about 20,000 per stablecoin and businesses at 10 million, but the BoE is now exploring supply-based guardrails instead.
2. The goal is to prevent rapid deposit flight from banks into stablecoins while making UK pound stablecoins more commercially viable than under the earlier, stricter design.
3. Draft rules are due in the coming months, and their details will decide whether GBP stablecoins can scale in payments or remain niche versus dollar-based rivals.

Deep Dive

1. From Holding Caps To Supply Caps

Earlier BoE proposals for systemic sterling stablecoins included temporary holding caps of 20,000 per person and 10 million per business for each coin in payments use, plus strict reserve rules that parked 40% of backing assets in non-interest-bearing deposits at the central bank, with most of the rest in short-term UK government debt.[^caps]

After heavy pushback, Deputy Governor Sarah Breeden has now said the BoE is considering temporary guardrails on the total amount of stablecoins that can be issued instead of per-user holding caps, arguing that this could achieve the same stability goals at lower cost and allow more high-value payment use cases for corporates.[^guardrails]

In parallel, officials are reviewing whether the 40% non-yielding reserve requirement is overly conservative, which has been criticized as making UK-issued stablecoins uncompetitive versus US and EU regimes.[^overly]

2. Why The BoE Wants Guardrails

The BoEs core worry is that if a large payment stablecoin takes off, households and firms could move deposits from commercial banks into tokens very quickly, weakening bank funding and credit provision.[^tv]

Supply-based caps let the BoE throttle overall growth of a systemic GBP stablecoin to manage that risk, without having to police each wallets balance across multiple platforms, which industry groups called operationally cumbersome.[^newsbtc]

The Bank also wants to keep sterling stablecoins attractive enough that activity does not simply migrate to offshore or dollar-based issuers like USDT and USDC, which currently dominate the roughly 300 billion dollar stablecoin market.[^yahoo]

3. What To Watch Next

Officials have signaled that updated draft rules for the UK stablecoin framework, including any supply-based caps and revised reserve ratios, are expected within months, with final rules targeted by around the end of 2026.[^CoinsKid]

Regulatory split will matter: the BoE will oversee systemic payment stablecoins, while the FCA handles smaller, non-systemic issuers, so only coins that scale into major payment rails are likely to face hard supply ceilings.[^decrypt]

For crypto users and builders, the key questions are how high any aggregate cap is set, how it scales over time, and whether reserve rules let issuers earn enough yield to compete with dollar stablecoins.

Conclusion

The BoE is pivoting from rigid per-user holding limits toward supply-based caps and more flexible reserves in an attempt to balance financial stability with competitiveness. If the final guardrails are calibrated generously, GBP stablecoins could become credible payment instruments within the UK; if they remain tight, activity will likely continue to concentrate in dollar-denominated stablecoins and more permissive jurisdictions.

[^caps]: See discussion of the proposed 20,000 retail and 10 million business caps and 40% reserve deposits in this overview of the BoEs earlier regime. [^guardrails]: Breedens comments on temporary issuance guardrails in place of holding caps are summarized here. [^overly]: The overly conservative characterization of the 40% reserve floor appears in this report. [^tv]: The BoEs concern about deposit outflows to stablecoins is outlined in this coverage. [^newsbtc]: Industry criticism that holding caps are cumbersome is described here. [^yahoo]: Context on UK competitiveness versus US and EU issuers is covered here. [^CoinsKid]: Timing for draft and final rules appears in this summary. [^decrypt]: Oversight split between the BoE and FCA is noted here.