Bank of England Lifts Stablecoin Holding Caps

TLDR

The Bank of England has scrapped proposed caps on how much sterling stablecoin users can hold and replaced them with a 40 billion issuance limit per coin.

1. Individual and corporate holding limits are gone, replaced by a temporary 40 billion cap on total issuance for each systemic sterling stablecoin.
2. Issuers get friendlier economics via higher-yield reserves, but rules still ban interest to users and require 30% of reserves to sit at the Bank of England.
3. A consultation runs into late 2026, with a 2027 launch target, so the key watchpoints are who applies to issue U.K. stablecoins and whether the 40 billion cap is relaxed.

Deep Dive

1. From User Caps To Issuance Cap

In its final policy and draft rules for systemic sterling stablecoins, the Bank of England dropped earlier plans to cap individuals at 20,000 and businesses at 10 million per coin, after heavy industry pushback. Under the revised framework, users and firms can hold unlimited amounts, while each systemic stablecoin faces a temporary aggregate issuance cap of 40 billion (about $52.8 billion) instead, as detailed by sources such as Bloomberg and CoinDesk.

The rules also tweak reserves. Issuers may now keep up to 70% of backing assets in short term U.K. government debt, with the remaining 30% in non interest bearing deposits at the Bank, according to Cointelegraph. Stablecoins must stay redeemable at par within 24 hours, reinforcing payment use rather than speculative leverage.

2. Implications For Issuers, Users, And Banks

For issuers, the ability to invest 70% of reserves in gilts improves yield and makes a sterling stablecoin business more viable, compared with the earlier, stricter proposals, as noted by finance.yahoo.com. At the same time, the 30% zero yield deposit requirement and the issuance cap keep the regime conservative versus some U.S. or EU setups.

Users and corporates benefit directly. They can now hold and use U.K. stablecoins without worrying about breaching per wallet caps, which is important for treasury, settlement, and large payment flows. The Bank still bans simple interest on balances, but allows activity based rewards such as payment related loyalty perks, per CoinDesk.

3. Timeline, Temporary Cap, And Key Risks

The policy is framed as final but open for feedback until 22 September 2026, with the rulebook due by year end 2026 and first systemic stablecoins targeted around 2027, as outlined by CCN.

The 40 billion issuance cap is explicitly described as a temporary guardrail that will be reviewed and potentially removed once risks to bank credit provision are better understood, according to Cointelegraph. Until then, it limits how dominant any single sterling stablecoin can become in the U.K., which may constrain network effects relative to uncapped dollar stablecoins.

For banks, the guardrail and reserve structure are meant to manage deposit flight risk if stablecoins scale quickly. For crypto users, the main questions are which issuers (banks, fintechs, or crypto natives) step up, and whether future revisions loosen caps or keep the regime tightly controlled.

Conclusion

By lifting user holding caps but capping total issuance and tightening prudential rules, the Bank of England is signaling that sterling stablecoins are welcome as regulated payment rails, not as free floating deposit competitors. The result is a more workable path for U.K. stablecoin growth, yet with clear ceilings and constraints that will shape which products launch, how large they can become, and how competitive they are against offshore dollar stablecoins over the next few years.