- Bank of England removes proposed holding limits for individuals and businesses using sterling stablecoins.
- New £40 billion issuance cap introduced for each systemic stablecoin issuer.
- Backing asset requirements eased, allowing up to 70% of reserves in short-term UK government debt.
- Final rules expected by the end of 2026, with regulated stablecoins potentially launching in the UK from 2027.
Bank of England Revises Stablecoin Framework
The Bank of England (BoE) has softened key elements of its proposed regulatory framework for sterling-denominated stablecoins, removing planned limits on individual holdings and replacing them with a temporary issuance cap for stablecoin providers.
In a policy statement and draft rules published on June 22, the central bank introduced a £40 billion (around $53 billion) issuance guardrail for each systemic stablecoin. The move marks a significant adjustment to earlier proposals that would have restricted how much stablecoin individuals and businesses could hold.
Under the previous framework, the BoE had proposed temporary holding limits of £20,000 per individual and £10 million for businesses. Those proposals drew criticism from crypto industry participants and lawmakers, who argued that the restrictions could limit adoption and reduce the competitiveness of the UK’s digital asset sector.
The revised framework eliminates those holding caps, allowing retail and corporate users to hold larger amounts of regulated sterling stablecoins while placing limits on the overall size of individual issuers.
Reserve Requirements Relaxed Under Draft Rules
The Bank of England also adjusted its requirements for the assets backing systemic stablecoins. Under the updated proposal, stablecoin issuers will be permitted to hold up to 70% of backing assets in short-term UK government debt, commonly known as gilts. The remaining 30% must be maintained as unremunerated deposits at the Bank of England.
This represents a relaxation from the central bank’s earlier proposal, which recommended a 60:40 split between short-term gilts and central bank reserves.
The BoE said the revised approach is designed to support stablecoin operations while maintaining financial stability safeguards. The central bank also indicated that the £40 billion issuance limit is intended as a temporary measure and could be increased or removed after further assessment of potential risks to credit provision and financial markets.
Sarah Breeden, Deputy Governor for Financial Stability, said:
“This is a major milestone in delivering greater choice and innovation in UK payments. Innovation thrives on trust. And today we’ve set out the foundations of that trust for a new form of money – with prompt redemption, strong protections and central bank support. This is truly a world leading regime.”
Consultation Process Continues Ahead of 2027 Launch
The latest proposals form part of the UK’s broader effort to establish a regulatory framework for stablecoins and digital payments. The Bank of England will continue consulting on the draft rules and gathering industry feedback before finalizing the framework.
The central bank is working alongside the Financial Conduct Authority (FCA) to develop the regulatory regime for systemic stablecoins operating in the UK financial system.
According to the timeline outlined in the policy statement, the Bank of England aims to finalize the rules by the end of 2026. Once implemented, the framework could allow regulated sterling-backed stablecoins to begin operating in the UK market from 2027.
The revisions represent one of the most significant changes to the BoE’s earlier proposals, reflecting feedback received during the consultation process while maintaining safeguards intended to support financial stability and consumer protection.
The stablecoin policy changes align with the Bank of England’s broader digital finance strategy. Sarah Breeden, Deputy Governor for Financial Stability, recently outlined a vision where bank deposits, tokenised deposits, regulated stablecoins, and potentially a digital pound can coexist within a competitive payments ecosystem. She said tokenisation could improve payment efficiency and financial market infrastructure while supporting innovation and financial stability across the UK economy.
Recent industry initiatives highlight growing interest in blockchain-based payment infrastructure. Toss Bank recently partnered with the Solana Foundation to test blockchain-powered remittance systems, exploring faster and lower-cost cross-border transfers through distributed ledger technology.
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