Key Takeaways
Bank of England dropped $26K (£20K) user caps, replacing them with a $52.9B (£40B) issuance guardrail.New rules ease reserve requirements, allowing up to 95% in UK gilts for new issuers.The Bank of England aims to finalize systemic stablecoin rules by the end of 2026.
Bank of England Revises Stablecoin Rules to Support Growth
The Bank of England has moved to make its systemic stablecoin regime more workable for issuers, publishing final policy positions and draft rules that ease several measures proposed last year.
The framework applies mainly to sterling-denominated systemic stablecoins, which the Bank defines as tokens that could become widely used in payments and pose risks to UK financial stability. These issuers would be regulated jointly by the Bank and the Financial Conduct Authority (FCA). The FCA will oversee issuance, custody, and trading admission for UK-issued qualifying stablecoins, while the Bank will supervise systemic payment risks.
The central bank said it plans to finalize its Code of Practice by the end of 2026. Once completed, the rules will apply to recognized systemic stablecoin issuers.
Issuance Guardrail Replaces User Caps
The most significant change is the removal of proposed individual holding limits. In its 2025 consultation, the Bank had considered caps of $26,440 (£20,000) per individual and $13.2 million (£10 million) per business for each coin.
After industry pushback, it replaced that approach with a temporary issuance “guardrail” set initially at $52.9 billion (£40 billion) per systemic stablecoin. The Bank said this would be less complex to implement while still limiting risks to credit provision as the financial system adapts to stablecoins.
The guardrail will be reviewed regularly and removed once the Bank is satisfied that risks to bank lending and credit provision have been addressed. The central bank said it rejected alternatives such as transaction limits, arguing they may not prevent large movements from bank deposits into stablecoins.
The improved framework comes as stablecoins continue to enjoy rapid growth with a current marketcap of $315.3 billion, as of June 22.
Reserve Rules Relaxed, But Remain Conservative
The Bank also softened its backing asset rules. Instead of requiring issuers to hold 60% of reserves in short-term UK government debt and 40% in unremunerated Bank of England deposits, the steady-state requirement will now be 70% short-term UK government debt and 30% unremunerated central bank deposits.
For issuers that are systemic at launch, the Bank will allow a step-up approach. These firms may hold up to 95% of backing assets in UK government debt securities while they scale. The Bank will also allow UK government debt with residual maturity of up to six months, using eligible sterling-denominated government debt.
Commercial bank deposits will not be permitted as backing assets. The Bank said allowing them would create financial and operational risks, as well as potential contagion between stablecoins and the wider banking system.
The framework also covers capital, safeguarding, redemptions, and failure arrangements. The Bank confirmed plans for a Central Bank Liquidity Facility that would act as a liquidity backstop for systemic stablecoin issuers.
The result is a regime that remains cautious, but less restrictive than the first draft. For stablecoin firms, the message is clearer: the UK wants sterling stablecoins to scale, but only inside a framework built around liquidity, redemption rights, and financial stability.
Currency conversion based on £1 to $1.32209 (Oanda)
