BoE softens rules for systemic stablecoins

TLDR

The Bank of England has eased its planned rules for major pound stablecoins by scrapping personal holding caps and loosening reserve rules, while adding a 40 billion issuance cap per coin.

1. The BoE dropped proposed per user holding limits and instead set a temporary 40 billion issuance guardrail for any single systemic sterling stablecoin.
2. Issuers can now keep up to 70% of reserves in short term UK government debt and 30% in non interest bearing central bank deposits, improving business viability.
3. The framework targets a 2027 launch and could make regulated GBP stablecoins more competitive, though systemic designations and the future of the issuance cap remain key to watch.

Deep Dive

1. What Actually Changed

In its new policy statement and draft Code of Practice, the Bank of England abandoned earlier plans to cap individuals at 20,000 and businesses at 10 million per stablecoin. Instead, it will impose a temporary 40 billion issuance cap on any single systemic sterling stablecoin, shifting the constraint from the wallet level to the aggregate level of the token itself. Reports from outlets like Cointelegraph and The Block highlight that this guardrail is explicitly described as temporary and subject to review as the market matures.

This change directly responds to industry and parliamentary feedback that user level caps would be hard to enforce and would make sterling stablecoins impractical for large scale payments and treasury use.

2. Softer But Still Heavily Regulated

The BoE also eased reserve composition rules. Systemic issuers may now hold up to 70% of reserves in short term UK government debt, up from the previously proposed 60%, with the remaining 30% as unremunerated deposits at the Bank of England, as described in analyses from Crypto.news and others.

At the same time, the regime keeps tight safeguards. Stablecoins must be redeemable at par within about 24 hours even in stress, issuers cannot pay simple deposit like interest on holdings, and capital, trust and liquidity requirements remain substantial.

3. Why It Matters And What To Watch

Strategically, the UK is trying to position itself as a credible hub for digital money while avoiding sudden deposit flight from banks into stablecoins. The 40 billion cap is intended to slow any very rapid migration of deposits while allowing meaningful scale for payments and institutional use, a point emphasized in several market commentaries.

The rules apply only to systemic stablecoins that HM Treasury designates based on payment usage, while trading focused dollar tokens like USDT and USDC remain under the Financial Conduct Authority. The BoE aims to finalize the rulebook by end 2026 with systemic stablecoin operations expected around 2027, according to detailed coverage from Cointelegraph.

Key signals to watch will be which GBP stablecoin proposals actually seek systemic status, whether the issuance cap is raised or phased out, and how the UK regime compares in practice to US and EU stablecoin rules.

Conclusion

The Bank of England has clearly shifted from an over cautious, user level model to a more scalable, issuer level guardrail for systemic GBP stablecoins, while keeping strict redemption and reserve standards. For crypto users and firms, this makes regulated pound stablecoins more plausible as real payment and treasury tools in the UK, but their growth will still be paced by the 40 billion cap and the politics of financial stability versus competition with banks.