Bank of England Drops Stablecoin User Caps and Sets $53 Billion Issuance Limit

Bank of England Revises Stablecoin Rules to Support Growth

The Bank of England has moved to marque its systemic stablecoin authorities much workable for issuers, publishing last argumentation positions and draught rules that easiness respective measures projected past year.

The framework applies chiefly to sterling-denominated systemic stablecoins, which the Bank defines arsenic tokens that could go wide utilized successful payments and airs risks to UK fiscal stability. These issuers would beryllium regulated jointly by the Bank and the Financial Conduct Authority (FCA). The FCA volition oversee issuance, custody, and trading admittance for UK-issued qualifying stablecoins, portion the Bank volition supervise systemic outgo risks.

The cardinal slope said it plans to finalize its Code of Practice by the extremity of 2026. Once completed, the rules volition use to recognized systemic stablecoin issuers.

Issuance Guardrail Replaces User Caps

The astir important alteration is the removal of projected idiosyncratic holding limits. In its 2025 consultation, the Bank had considered caps of $26,440 (£20,000) per idiosyncratic and $13.2 cardinal (£10 million) per concern for each coin.

After manufacture pushback, it replaced that attack with a impermanent issuance “guardrail” acceptable initially astatine $52.9 cardinal (£40 billion) per systemic stablecoin. The Bank said this would beryllium little analyzable to instrumentality portion inactive limiting risks to recognition proviso arsenic the fiscal strategy adapts to stablecoins.

The guardrail volition beryllium reviewed regularly and removed erstwhile the Bank is satisfied that risks to slope lending and recognition proviso person been addressed. The cardinal slope said it rejected alternatives specified arsenic transaction limits, arguing they whitethorn not forestall ample movements from slope deposits into stablecoins.

The improved model comes arsenic stablecoins proceed to bask accelerated maturation with a existent marketcap of $315.3 billion, arsenic of June 22.

Reserve Rules Relaxed, But Remain Conservative

The Bank besides softened its backing plus rules. Instead of requiring issuers to clasp 60% of reserves successful short-term UK authorities indebtedness and 40% successful unremunerated Bank of England deposits, the steady-state request volition present beryllium 70% short-term UK authorities indebtedness and 30% unremunerated cardinal slope deposits.

For issuers that are systemic astatine launch, the Bank volition let a step-up approach. These firms whitethorn clasp up to 95% of backing assets successful UK authorities indebtedness securities portion they scale. The Bank volition besides let UK authorities indebtedness with residual maturity of up to six months, utilizing eligible sterling-denominated authorities debt.

Commercial slope deposits volition not beryllium permitted arsenic backing assets. The Bank said allowing them would make fiscal and operational risks, arsenic good arsenic imaginable contagion betwixt stablecoins and the wider banking system.

The model besides covers capital, safeguarding, redemptions, and nonaccomplishment arrangements. The Bank confirmed plans for a Central Bank Liquidity Facility that would enactment arsenic a liquidity backstop for systemic stablecoin issuers.

The effect is simply a authorities that remains cautious, but little restrictive than the archetypal draft. For stablecoin firms, the connection is clearer: the UK wants sterling stablecoins to scale, but lone wrong a model built astir liquidity, redemption rights, and fiscal stability.

Currency conversion based connected £1 to $1.32209 (Oanda)