Bank of England eases GBP stablecoin rules

TLDR

The Bank of England has relaxed its planned rules for pound-pegged stablecoins, making large GBP stablecoins more viable in the UK while keeping a cap on their overall size.

1. The Bank dropped planned per-user holding limits and instead set a temporary 40 billion issuance cap for each systemic GBP stablecoin.
2. Issuers can now hold up to 70% of reserves in short-term UK government debt, improving yields and economics while keeping a 30% buffer at the central bank.
3. The framework is due to be finalized by end 2026, with systemic GBP stablecoins potentially live in 2027, so issuers and users should watch which projects move to get licensed in the UK.

Deep Dive

1. What Actually Changed

In its latest policy statement and draft rules, the Bank of England removed earlier proposals to cap individual holdings of sterling stablecoins (previously floated at 20,000 per person and 10 million per business) and replaced them with a temporary 40 billion issuance guardrail per systemic stablecoin, shifting focus from wallet-level limits to aggregate size.[^ct]

The rules target systemic pound-backed stablecoins - those widely used in payments and judged to pose financial stability risks - while leaving trading-focused, non-systemic tokens under the Financial Conduct Authority. The Bank describes stablecoins as a new form of money and wants them redeemable at par within 24 hours under all conditions.[^yahoo]

2. Why It Matters For Crypto And GBP Liquidity

Under the updated framework, issuers can keep up to 70% of reserves in short-term UK government debt, up from a previously proposed 60%, with the remaining 30% in non-interest-bearing central bank deposits.[^cmc_reserves] This meaningfully improves the business model compared with a higher cash requirement, while still keeping a substantial safety buffer.

For users, removing per-wallet caps means there is no direct regulatory limit on how much of a systemic GBP stablecoin an individual or institution can hold, which is important for payments, settlement and DeFi use cases.[^cmc_limits] However, the 40 billion issuance cap and the 30% zero-yield reserve slice still make the UK regime more conservative than some dollar and euro competitors.

3. What To Watch Next

The Bank plans to consult on the draft Code of Practice through September 2026 and aims to finalize rules by the end of 2026, with systemic GBP stablecoins potentially operating under the new regime from 2027.[^ct]

Key open questions include how long the temporary 40 billion cap lasts, whether GBP stablecoins will be allowed in core wholesale settlement systems, and which major issuers (for example, large global stablecoin providers or UK banks via ring-fenced entities) actually choose to build within this framework.[^cmc_policy]

Conclusion

By scrapping per-user caps and easing reserve rules while keeping a system-wide issuance limit and strict redemption conditions, the Bank of England is signaling that it wants GBP stablecoins to exist at scale, but only within tight risk boundaries. For crypto participants, the real impact will depend on which issuers step in and how quickly UK-regulated GBP stablecoins gain liquidity and integration across exchanges, wallets and DeFi.

[^ct]: Policy details on caps and reserve shifts are summarized in this systemic stablecoin rules report. [^yahoo]: The guardrail and prompt redemption focus are outlined in this overview of the new framework. [^cmc_reserves]: Reserve composition changes and the 70 percent gilts, 30 percent deposits split are discussed in this analysis of the final framework. [^cmc_limits]: The removal of individual caps and introduction of the 40 billion issuance cap are detailed in this summary of the BoE revisions. [^cmc_policy]: Broader policy context and consultation timeline are covered in this Bank of England policy recap.