BoE scraps £20K stablecoin cap, sets £40B ceiling per token

The Bank of England has scrapped its proposed £20,000 per-person and £10 million per-business caps on sterling stablecoin holdings, replacing them in a June 22 policy statement with a single £40 billion ceiling on how large any single systemic pound token can grow inside the UK. Households and companies can now hold unlimited balances of regulated sterling stablecoins; each coin itself can scale to £40 billion before issuance has to stop.

The framework also loosens the reserve rules that had threatened issuer economics. The November 2025 draft would have forced systemic issuers to park 40% of backing in unremunerated Bank of England deposits, with 60% in short-term gilts. The new rules cut the deposit floor to 30%, allow up to 70% in short-dated UK government debt, and let tokens deemed systemic at launch begin at 95% gilts and scale down as they grow.

Why it matters

Sterling tokens sit at roughly 0.5% of a global stablecoin market worth around $315 billion, dominated by dollar-denominated coins. The US wrote that dominance into law with the GENIUS Act, while Europe is racing to build a euro answer after watching Europeans run 38% of global stablecoin transaction volumes against a euro token supply of just 0.3%. A capped, reserve-constrained sterling coin enters that contest from an even smaller base, carrying a ceiling its dollar and euro competitors do not face.

The Bank's underlying worry is deposit flight. If households and firms shift large balances out of commercial bank accounts into stablecoins, banks lose cheap funding and lending capacity tightens, with the pressure building fastest in stress. The £40 billion cap is the BoE's tool to contain that competition before it turns systemic, and the Bank has signalled it will lift the limit once it is satisfied the risks to credit provision are handled.

Market impact

For issuers, the new reserve split is the real economics. More of the float now earns yield, which is the difference between a viable sterling coin and one that loses money against dollar rivals holding short-dated US Treasuries.