BoE Drops Stablecoin Holding Limits, Sets £40bn Cap

The Bank of England published its final stablecoin rules on [date], stripping away proposed holding limits that would have capped individual and business ownership of systemic sterling-backed stablecoins. In their place, the framework sets a £40 billion issuance cap for any single stablecoin system.

The reserve rules also shifted. Issuers can now hold up to 70% of backing assets in short-term government securities, up from the 60% limit in earlier drafts. The change followed industry feedback that the original cap was too tight for a functioning payments system.

Sarah Breeden, the Bank's Deputy Governor for financial stability, called the framework "an essential step" toward a credible digital payments system. She said regulators would continue working to ensure users have a right to redeem their stablecoins at par.

The final rules come after months of consultation among regulators, lawmakers, and industry participants. Earlier proposals had included a £20,000 holding limit for individuals and a £10 million cap for businesses using systemic stablecoins in routine payments. Trade bodies argued those thresholds would choke innovation and keep the market small.

Politicians also pushed for a lighter touch. Sterling-based stablecoins account for a tiny slice of the global market, they noted, and heavy-handed rules could cede ground to dollar-pegged competitors.

The Bank maintained that financial stability remains the priority. It warned that large-scale shifts from bank deposits into stablecoins could disrupt lending and money markets.

The consultation on the final framework runs through September. Regulators aim to finalise the rules before year-end, which would allow the first regulated stablecoins to launch in 2027.