The Bank of England has dropped planned limits on how much sterling-backed stablecoin an individual can hold and softened reserve requirements in its final rules for systemic stablecoins — a move regulators say balances financial stability with payments innovation.
What changed
- Individual holding caps scrapped: The BoE will not proceed with the previously proposed per-person limits (which in November 2025 would have capped retail holdings at £20,000 and set corporate limits of roughly $13.5 million).
- Issuance cap introduced: Instead of policing individual wallets, the Bank will cap the total supply of any single sterling stablecoin, setting an initial threshold at £40 billion ($52.8 billion).
- Reserve mix relaxed: Issuers may now hold up to 70% of reserves in short-term UK government debt (up from a proposed 60%). The remaining 30% must be kept as non-interest-bearing deposits at the Bank of England.
Why regulators changed course
The November 2025 proposals aimed to limit the risk that widespread stablecoin use would trigger large deposit outflows from commercial banks. But industry participants, including digital-asset firms and legal advisers, argued that individual ownership caps would be hard to enforce across wallets and trading venues. They also warned that high non-interest-bearing reserve requirements could undermine the commercial case for sterling stablecoins.
Responding to that feedback, Deputy Governor for Financial Stability Sarah Breeden framed the final rules as both protective and enabling: they provide prompt redemption rights, user safeguards and central bank backing while allowing new payment innovations to develop in the UK. Breeden has repeatedly said the Bank wants multiple forms of digital money — stablecoins, tokenized bank deposits and potentially a retail CBDC — to operate alongside traditional bank deposits.
Broader regulatory context
The new stablecoin framework arrives as UK authorities push ahead with tokenization projects. The BoE and the Financial Conduct Authority have sought input on rules for tokenized securities and market infrastructure, and the Bank-FCA Digital Securities Sandbox is preparing firms for commercial rollouts.
Market implications
By replacing individual caps with a total-issuance ceiling and easing reserve composition rules, the BoE aims to limit systemic risk while keeping sterling-backed stablecoins commercially viable. Regulators remain concerned that large-scale stablecoin adoption could shift deposits away from banks and influence lending and borrowing costs; the final framework is designed to mitigate those risks without blocking regulated stablecoins from entering the UK market.
Next steps
The Bank’s final policy and draft rules will guide the initial phase of regulated sterling stablecoin deployments, subject to ongoing industry engagement and future supervisory work as the market evolves.
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