The Bank of England has abandoned its earlier proposal to impose holding limits on stablecoin users, instead opting for a system-wide issuance cap of £40 billion ($54 billion) per systemic stablecoin, according to its final policy statement published on Monday. The move is a pivotal shift in the UK’s approach to digital money regulation, designed to balance financial stability with innovation.
Under the original consultation plans, both retail and institutional holders would have faced strict caps on how much of a given stablecoin they could own. Industry feedback argued such restrictions would stifle utility for payments and settlement. The revised framework replaces individual limits with an issuance guardrail, which the Bank says is “cheaper and easier to implement” while still protecting credit provision and allowing unrestricted use by households and businesses.
Alongside the cap, the Bank relaxed its rules on backing assets. Initially it required reserves to be held mostly in highly liquid, low-risk instruments like short-term government bonds. The final policy allows systemic issuers to hold up to 70% of backing assets in interest-bearing short-term UK government debt, up from a proposed 60%, with the remainder in central bank deposits. This adjustment addresses concerns from stablecoin firms that overly strict rules would limit yield generation and operational viability.
The £40 billion limit is a transitional measure; the Bank will review it regularly and remove it once risks to credit provision are resolved. Issuers, regulators, and the Financial Conduct Authority (FCA) are coordinating an end-to-end regime, with a managed transition for firms moving from non-systemic to systemic status. Further details are expected alongside the FCA’s own rules.
Sarah Breeden, Deputy Governor for Financial Stability, called the framework a “world-leading regime” and “a major milestone in delivering greater choice and innovation in UK payments.” Stakeholders have until 22 September 2026 to comment on the draft Code of Practice; the Bank aims to finalize it by the end of 2026, with regulated stablecoins expected to operate in the UK from 2027.
