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 systemic stablecoins, softening several measures from its earlier proposal. The most notable change is the removal of proposed individual holding limits of $26,440 per person and $13.2 million per business. Instead, the central bank introduced a temporary issuance guardrail of £40 billion (approximately $52.9 billion) per systemic stablecoin, which it says is less complex to implement while limiting risks to credit provision.
The guardrail will be reviewed regularly and removed once the Bank is satisfied that risks to bank lending are addressed. The Bank rejected alternatives such as transaction limits, arguing they may not prevent large movements from bank deposits into stablecoins.
The framework applies primarily to sterling-denominated systemic stablecoins that could become widely used in payments and pose risks to UK financial stability. These issuers will be jointly regulated by the Bank of England and the Financial Conduct Authority (FCA). The FCA oversees issuance, custody, and trading admission for qualifying stablecoins, while the Bank supervises systemic payment risks.
The Bank also relaxed its reserve requirements. Instead of the originally proposed 60% short-term UK government debt and 40% unremunerated central bank deposits, the steady-state requirement will be 70% short-term UK government debt and 30% unremunerated central bank deposits. For issuers that are systemic at launch, a step-up approach allows up to 95% of backing assets in UK government debt securities while they scale. UK government debt with residual maturity of up to six months is permitted. Commercial bank deposits are not allowed as backing assets, as the Bank cited risks of contagion between stablecoins and the wider banking system.
The rules also cover capital, safeguarding, redemptions, and failure arrangements. The Bank confirmed plans for a Central Bank Liquidity Facility to act as a liquidity backstop for systemic stablecoin issuers. The Bank aims to finalize its Code of Practice by the end of 2026. Once completed, the rules will apply to recognized systemic stablecoin issuers.
The revised framework is less restrictive than the initial draft, giving clearer guidance for stablecoin firms. The UK wants sterling stablecoins to scale but within a framework built around liquidity, redemption rights, and financial stability.