CoinDesk
The Bank of England has scrapped its proposed caps on how much stablecoin individuals and corporations can hold, replacing them with a temporary £40 billion ($50.6 billion) aggregate issuance guardrail on any single systemic stablecoin. Under the revised framework published Monday, the central bank also lowered the mandatory share of non-interest-bearing central bank deposits backing stablecoins to 30%, freeing issuers to allocate up to 70% of reserves into short-term UK government debt with maturities under six months.
The reversal abandons the original £20,000 individual and £10 million corporate holding limits after a consultation period drew sharp pushback from the crypto industry and the House of Lords Financial Services Regulation Committee, both of which warned the caps would undermine business viability and the UK's international competitiveness. "We acknowledge the issues raised and have reviewed the analysis supporting the calibration," the Bank of England said in its statement, conceding that its earlier restrictions had been miscalibrated.
Why it matters
This is a meaningful climbdown for Threadneedle Street. The original regime would have made the UK one of the most restrictive major jurisdictions for regulated stablecoins, capping the very use case that makes them useful, programmable settlement rails for cross-border payments, treasury operations and on-chain finance. By pivoting to a macro-level issuance ceiling and allowing 70% of reserves to be deployed in yield-bearing gilts, the Bank is signaling it would rather keep UK-based stablecoin issuers onshore and competitive than push them to Frankfurt, Zurich or Singapore.
Yield economics matter. Letting issuers keep 70% of reserves in short-dated UK debt materially improves the unit economics of running a regulated stablecoin in the UK, because the spread on those holdings is what funds issuance, redemption infrastructure and compliance overhead.
Frequently asked questions
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What did the Bank of England actually change on stablecoins?
The BOE dropped its proposed £20,000 individual and £10 million corporate holding caps, replacing them with a temporary £40 billion ($50.6 billion) aggregate issuance ceiling on any single systemic stablecoin.
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How much of stablecoin reserves can issuers hold in UK government debt?
Under the revised framework, issuers must keep 30% of reserves in non-interest-bearing central bank deposits and can allocate up to 70% to short-term UK government debt with maturities under six months.
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Can stablecoin holders earn interest or rewards under the new UK rules?
Direct interest and dividend payments to coin holders remain banned, but the BOE explicitly permits activity-based rewards such as cash-back tokens and loyalty points tied to payment transactions.
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Why did the Bank of England reverse its original stablecoin proposal?
The BOE cited feedback from its consultation and a House of Lords Financial Services Regulation Committee report that the original caps would hurt issuer viability and the UK's international competitiveness.
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When will the new UK stablecoin framework take effect?
A final feedback window closes in September, and the BOE expects full UK crypto rules, including the stablecoin regime, to come into force in 2027. The £40B issuance guardrail is temporary and will be phased out as the market matures.
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