The Bank of England has scrapped proposed individual limits on sterling-backed stablecoin holdings and relaxed some reserve rules in its final framework for systemic stablecoins — a major shift that clears the way for larger, regulated stablecoins in the UK while aiming to guard financial stability.
What changed
- The BoE will not cap how much of a sterling-backed stablecoin a single person or entity can hold. Instead, it will limit total issuance of any single stablecoin, setting an initial ceiling of £40 billion ($52.8 billion).
- Issuers may now hold up to 70% of their reserves in short-term UK government debt, up from the 60% suggested in earlier consultations. The remaining 30% must be kept as non-interest-bearing deposits at the Bank of England.
Why it matters
The revision follows months of industry feedback. Earlier proposals (November 2025) would have restricted individual holdings to £20,000 per person for a single UK stablecoin during an initial adoption phase, with corporate caps around $13.5 million. Regulators had argued such limits would curb the risk of rapid outflows from banks if stablecoins were widely used for payments. But crypto firms, legal advisers and potential issuers warned ownership caps are hard to enforce across wallets and trading venues, and said high non-interest-bearing reserve requirements would make issuing sterling stablecoins less commercially viable.
Regulator perspective
Sarah Breeden, Deputy Governor for Financial Stability at the Bank of England, framed the final rules as protection for a new form of digital money while supporting payment innovation: “This is a major milestone in delivering greater choice and innovation in UK payments,” she said, noting the framework includes prompt redemption rights, user safeguards and central bank support.
Industry view
Marcos Viriato, CEO and co-founder of Parfin, welcomed the shift from theoretical debate to operational focus: “For years, the debate has centred on legitimacy. The conversation is becoming much more operational. Institutions are focused on how digital money moves, how it settles and how it fits within existing compliance and risk frameworks,” he told crypto.news. Viriato added that the bigger challenge ahead is building interoperability and settlement infrastructure so different forms of digital money can work together at scale.
Broader context
The Bank of England is positioning stablecoins as one element of a wider digital payments strategy that also includes tokenized bank deposits and a potential retail central bank digital currency (CBDC). At City Week 2026, Breeden signalled the BoE’s preference for restricting total issuance rather than individual ownership during early adoption.
Meanwhile, UK authorities are advancing other tokenization efforts. The Bank and Financial Conduct Authority have sought feedback on rules for tokenized securities and market infrastructure, and the Bank-FCA Digital Securities Sandbox is preparing firms for commercial launches.
What regulators are trying to solve
Stablecoins have grown rapidly as a tool for faster, lower-cost payments, including cross-border transfers. But the BoE has repeatedly warned that large-scale adoption could divert deposits away from commercial banks, potentially affecting bank lending and borrowing costs. The final framework aims to mitigate those risks while enabling regulated, sterling-backed stablecoins to operate in the UK market.
Bottom line
By replacing ownership caps with a total-issuance limit and loosening reserve composition requirements, the Bank of England has taken a pragmatic step to encourage regulated stablecoin activity in the UK — while attempting to balance innovation with systemic safeguards. The next test will be whether market participants can build the interoperable settlement and compliance systems regulators say are needed for adoption at scale.
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