Bank of England Drops Stablecoin User Caps and Sets $53 Billion Issuance Limit
The Bank of England has published its final policy positions and draft rules for systemicstablecoins, softening parts of its earlier proposal. The central bank dropped individual holding caps and instead. . .
The Bank of England has published its final policy positions and draft rules for systemicstablecoins, softening parts of its earlier proposal. The central bank dropped individual holding caps and instead proposed a temporary $52. 9 billion (£40 billion) issuance limit for each systemicstablecoin. Key TakeawaysBank 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 RevisesStablecoinRules to Support GrowthThe Bank of England has moved to make its systemicstablecoinregime more workable for issuers, publishing final policy positions and draft rules that ease several measures proposed last year. Theframeworkapplies mainly to sterling-denominated systemicstablecoins, 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 qualifyingstablecoins, 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 systemicstablecoinissuers. Issuance Guardrail Replaces User CapsThe 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 systemicstablecoin. The Bank said this would be less complex to implement while still limiting risks to credit provision as the financial system adapts tostablecoins. 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 intostablecoins. The improved framework comes asstablecoinscontinue to enjoy rapid growth with a currentmarketcapof $315. 3 billion, as of June 22. Reserve Rules Relaxed, But Remain ConservativeThe 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 betweenstablecoinsand the wider banking system. The framework also covers capital, safeguarding, redemptions, and failure arrangements. The Bank confirmed plans for a Central BankLiquidityFacility that would act as aliquiditybackstop for systemicstablecoinissuers. The result is a regime that remains cautious, but less restrictive than the first draft. Forstablecoinfirms, the message is clearer: the UK wants sterlingstablecoinsto scale, but only inside a framework built aroundliquidity, redemption rights, and financial stability. Currency conversion based on £1 to $1. 32209 (Oanda)