Bank of England eases stablecoin issuance limits

TLDR

The Bank of England has relaxed its draft stablecoin rules by scrapping user holding caps and moving to a larger, capped issuance model for sterling stablecoins.

1. The BoE removed planned per-wallet limits and instead proposes a temporary 40 billion issuance cap per systemic GBP stablecoin, while loosening reserve-composition rules.
2. This creates a clearer path for regulated pound stablecoins in UK payments, although the cap keeps any single GBP token smaller than major dollar stablecoins.
3. Key next steps are the consultation to late 2026 and how the BoE and FCA define systemic coins, which will decide who can scale under the new regime.

Deep Dive

1. What Changed In The Rules

Earlier drafts would have capped holdings at about 20,000 per individual and 10 million per business per stablecoin. After industry pushback, the Bank of England dropped these wallet caps.

The new proposal introduces a temporary 40 billion issuance ceiling for each systemic sterling-backed stablecoin, according to a June 22 policy package and Code of Practice draft. Issuers may now hold up to 70% of reserves in short term UK government bonds, up from 60%, with the remaining 30% in non interest-bearing central bank deposits, and must redeem at par within 24 hours.

This keeps strong prudential safeguards but removes the most user-facing frictions, shifting the constraint from how much a person can hold to how large a coin can grow in total.

2. Why It Matters For Crypto And Payments

Removing holding caps makes pound stablecoins more usable for real-world payments and treasury use, since corporates are no longer hard-limited at 10 million per coin.

The 40 billion issuance cap per systemic token still keeps any single GBP stablecoin far below leading dollar tokens like USDT and USDC, but it is large enough to support a meaningful domestic payment network while managing fears of rapid bank deposit outflows.

Compared with the EUs MiCA regime, which is already live, the UK is signaling a relatively open but tightly supervised model that could attract issuers willing to operate under strict reserve and redemption rules.

3. What To Watch Next

The Bank of England will consult on the proposals into late 2026 and aims to finalize its Code of Practice by year end, with regulated sterling stablecoins expected to operate in the UK from 2027, as outlined in a June 22 policy statement and analysis.

Key open questions are how systemic designation is applied, whether the 40 billion ceiling is raised or removed over time, and how the regime interacts with bank funding and UK on off ramps. Market structure will also depend on how the FCA aligns conduct rules and which payment firms and fintechs actually launch GBP stablecoins under this framework.

Conclusion

The BoEs shift from strict holding caps to a larger issuance ceiling signals that the UK wants pound stablecoins in its payment mix, but only within conservative prudential guardrails. For crypto users, this points to a future where regulated GBP tokens can play a bigger role in UK payments and DeFi links, while remaining structurally smaller and more tightly supervised than the largest dollar stablecoins.