UK Eases Stablecoin Rules in Bid to Keep Digital Finance Onshore

For stablecoin companies, the relief is practical. Lower cash reserve requirements mean cheaper capital tied up in backing tokens, narrowing the cost gap with EU-based issuers. Dropping holding limits removes a barrier for market makers and treasury operations that move large volumes of stablecoins.

The BoE's first consultation in 2023 had proposed individual holding caps and a strict cash-reserve mandate. Issuers warned those rules would push activity offshore, undermining the government's post-Brexit ambition for a digital-asset hub. The final framework backs down on both points.

The change also aligns the UK more closely with approaches in Switzerland and Singapore, where stablecoin frameworks have attracted issuers without the same capital constraints. The BoE's earlier proposal set a £40 billion cap on total issuance, as AlphaScala covered in its initial report on the rules.

The final framework sits inside the Financial Services and Markets Act, which Parliament passed last year. The next step is implementation guidance from the Financial Conduct Authority. That document is expected later this year and will spell out how the new reserve requirements work in practice.