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The Bank of England has revised one of the most controversial parts of its stablecoin proposals, replacing individual holding limits with a single aggregate issuance cap.
The change removes a key obstacle to using pound-backed stablecoins for larger balances, settlement, and collateral.
The revised proposal drops plans to cap individual holdings at £20,000 and business holdings at £10 million per coin. Instead, the BoE will apply a temporary £40 billion aggregate issuance limit for systemic stablecoins.
Industry concerns have not disappeared. Coinbase’s European policy head Katie Harries told the FT that two questions remain: how long the “temporary” per-coin issuance cap will last, and whether stablecoins will be allowed for settlement in core wholesale markets. Without the second point, she argued, the UK’s tokenisation ambitions would be harder to deliver.
A Simpler Framework for Market Participants
The original limits would have required firms to track individual account balances against holding caps, adding operational complexity for brokers, exchanges, and liquidity providers.
The issuance-level cap removes that requirement. Market participants can hold and transfer larger GBP stablecoin balances without tracking individual account limits.
The change also makes a wider range of use cases more practical, including cross-border settlement and the use of stablecoins as collateral.
“This is a major milestone in delivering greater choice and innovation,” said Sarah Breeden, the BoE’s deputy governor for financial stability.
Improved Economics for Issuers
The earlier proposal reflected the BoE’s concern that stablecoins could accelerate deposit outflows in a banking stress event. However, the regulator adjusted reserve requirements.
The share of backing assets required to be held in non-interest-bearing central bank deposits has been reduced from 40% to 30%. That leaves a larger portion of reserves available for assets such as short-term gilts.
For issuers, the change improves the economics of operating a pound-backed stablecoin. The segment currently represents less than 0.5% of the global stablecoin market.
The UK’s approach sits between the frameworks emerging in the US and the EU. Washington is encouraging the growth of dollar-denominated payment stablecoins through the GENIUS Act.
The EU’s MiCA regime focuses more heavily on reserve quality, liquidity, and supervision of significant issuers.
The BoE’s framework reflects a different concern: supporting innovation without increasing risks to a banking system that remains heavily dependent on deposits.
Banks Still Face Structural Hurdles
The BoE has not changed its position on bank-issued stablecoins.
Banks that want to issue stablecoins must still do so through insolvency-remote entities with separate branding and governance structures.
ClearBank executives have argued that this requirement could make participation difficult for traditional banks.
The rule may leave non-bank issuers and fintechs with greater flexibility in the near term.
While banks assess the operational and legal implications, independent issuers can move forward under a framework that requires 24-hour redemption and statutory trust arrangements.
The BoE is targeting finalised rules by the end of 2026.
The Bank of England has revised one of the most controversial parts of its stablecoin proposals, replacing individual holding limits with a single aggregate issuance cap.
The change removes a key obstacle to using pound-backed stablecoins for larger balances, settlement, and collateral.
The revised proposal drops plans to cap individual holdings at £20,000 and business holdings at £10 million per coin. Instead, the BoE will apply a temporary £40 billion aggregate issuance limit for systemic stablecoins.
Industry concerns have not disappeared. Coinbase’s European policy head Katie Harries told the FT that two questions remain: how long the “temporary” per-coin issuance cap will last, and whether stablecoins will be allowed for settlement in core wholesale markets. Without the second point, she argued, the UK’s tokenisation ambitions would be harder to deliver.
A Simpler Framework for Market Participants
The original limits would have required firms to track individual account balances against holding caps, adding operational complexity for brokers, exchanges, and liquidity providers.
The issuance-level cap removes that requirement. Market participants can hold and transfer larger GBP stablecoin balances without tracking individual account limits.
The change also makes a wider range of use cases more practical, including cross-border settlement and the use of stablecoins as collateral.
“This is a major milestone in delivering greater choice and innovation,” said Sarah Breeden, the BoE’s deputy governor for financial stability.
Improved Economics for Issuers
The earlier proposal reflected the BoE’s concern that stablecoins could accelerate deposit outflows in a banking stress event. However, the regulator adjusted reserve requirements.
The share of backing assets required to be held in non-interest-bearing central bank deposits has been reduced from 40% to 30%. That leaves a larger portion of reserves available for assets such as short-term gilts.
For issuers, the change improves the economics of operating a pound-backed stablecoin. The segment currently represents less than 0.5% of the global stablecoin market.
The UK’s approach sits between the frameworks emerging in the US and the EU. Washington is encouraging the growth of dollar-denominated payment stablecoins through the GENIUS Act.
The EU’s MiCA regime focuses more heavily on reserve quality, liquidity, and supervision of significant issuers.
The BoE’s framework reflects a different concern: supporting innovation without increasing risks to a banking system that remains heavily dependent on deposits.
Banks Still Face Structural Hurdles
The BoE has not changed its position on bank-issued stablecoins.
Banks that want to issue stablecoins must still do so through insolvency-remote entities with separate branding and governance structures.
ClearBank executives have argued that this requirement could make participation difficult for traditional banks.
The rule may leave non-bank issuers and fintechs with greater flexibility in the near term.
While banks assess the operational and legal implications, independent issuers can move forward under a framework that requires 24-hour redemption and statutory trust arrangements.
The BoE is targeting finalised rules by the end of 2026.
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