BoE sets $50B cap on stablecoins

TLDR

The Bank of England has set a temporary roughly $50 billion cap on the size of each regulated systemic sterling stablecoin and removed previously planned per-user limits.

1. The new rules replace individual holding caps with a 40 billion (about $5053 billion) issuance cap per systemic stablecoin and relax reserve composition requirements.
2. This makes the UK framework more workable for issuers while still trying to protect bank deposits and financial stability.
3. The cap is described as a temporary guardrail and is likely to be reviewed as the UK moves toward a full stablecoin regime around 2027.

Deep Dive

1. What The BoE Actually Changed

The BoEs final framework drops earlier proposals to cap how much of a sterling stablecoin individuals and businesses can hold (previously floated at 20,000 per person and 10 million per firm).5cAln4vw

Instead, it introduces a temporary aggregate issuance limit of 40 billion (about $5053 billion) per systemic sterling stablecoin. Systemic means pound-backed tokens used widely in payments and seen as potentially important for financial stability.iuAVmlhj

At the same time, issuers can now hold up to 70% of reserves in short term UK government debt and 30% as non-interest-bearing deposits at the BoE, versus a stricter 60:40 split previously proposed.crypto.news

2. Why This Matters For Crypto And Issuers

The shift from wallet-level caps to an issuer-level cap directly addresses industry concerns that per-user limits would make sterling stablecoins impractical for real-world payments and treasury use.4rZCBFtJ

Allowing 70% of reserves in short term gilts improves economics for issuers while still imposing strict liquidity and safety constraints. However, issuers remain barred from paying simple deposit-like interest to holders, even though reserves earn yield.iuAVmlhj

Non systemic stablecoins primarily used for crypto trading, such as major dollar tokens, will remain under the Financial Conduct Authority regime rather than this BoE cap, which keeps the focus on sterling payment coins.10RVTpup

3. What To Watch Next

The BoE describes the 40 billion cap as a temporary guardrail that will be reviewed and removed once risks to bank credit provision are considered addressed.5cAln4vw

The central bank aims to finalize its rulebook by the end of 2026, with systemic sterling stablecoins expected to operate under the new regime from around 2027.5cAln4vw

Key open questions include how quickly any UK GBP stablecoin could approach that 40 billion ceiling, whether the cap is raised or scrapped over time, and how competitive sterling coins become versus dominant dollar stablecoins.

Conclusion

The BoEs roughly $50 billion cap is less a hard brake on stablecoins and more a sizing guardrail while the UK tests systemic pound-backed tokens. By scrapping per-user limits and improving reserve economics, the framework invites serious issuers while still constraining how large any one regulated GBP stablecoin can become until financial stability risks are better understood.