The Bank of England has removed proposed individual and business holding limits on systemic stablecoins in its final regulatory framework, marking a significant policy shift to support the growth of sterling-denominated digital money while maintaining financial stability safeguards. Announced on June 22, 2026, the updated rules replace earlier caps of £20,000 for individuals and £10 million for businesses with a temporary total issuance limit of £40 billion per stablecoin.
This change responds to industry feedback and concerns from lawmakers that strict holding restrictions could hinder the development of a competitive UK stablecoin market. The Bank described its initial proposals as potentially “overly conservative” and has adopted a more flexible approach focused on overall issuance size as a primary guardrail.
Key Elements of the Final Framework
Under the new rules, issuers of systemic stablecoins — those deemed critical to the UK payments system — must maintain robust reserves. Issuers are required to hold at least 30% of backing assets as deposits at the Bank of England, with the remainder invested in short-term UK government debt and other high-quality liquid assets. This structure aims to ensure full redeemability and resilience against runs.
The £40 billion issuance cap per stablecoin will act as a transitional safeguard. It is designed to limit rapid scaling that could disrupt traditional banking deposits and credit provision to the real economy. The Bank expects these limits to be reviewed and potentially eased as adoption matures and risks are better understood.
Systemic stablecoins will fall under joint oversight by the Bank of England for prudential and stability matters, and the Financial Conduct Authority for conduct and consumer protection. Non-systemic issuers will continue under FCA regulation. Authorities aim to enable regulated sterling stablecoins to become operational from 2027.
Background and Policy Evolution
The Bank’s November 2025 consultation proposed holding limits to mitigate risks of large-scale shifts from bank deposits into digital assets. However, feedback from the industry, the House of Lords, and market participants highlighted potential competitive disadvantages compared to more flexible regimes in the United States and elsewhere. Deputy Governor Sarah Breeden played a key role in signalling openness to alternatives.
The revised framework balances innovation with prudence. It supports the UK’s ambition to become a hub for digital finance while protecting monetary stability and preventing disorderly transitions in the financial system.
Broader Implications
This policy adjustment is expected to accelerate development of UK-issued stablecoins for payments, remittances, and potentially tokenized assets. It positions the country more competitively in the global race to regulate and harness digital money technologies. Businesses and consumers could benefit from faster, cheaper cross-border transactions and improved payment efficiency.
Critics may still raise concerns about potential risks to banking sector deposits, but the Bank has emphasised ongoing monitoring and a principles-based supervisory approach. Economists view the move as pragmatic recognition that overly restrictive rules could drive activity offshore.
As the UK finalises its stablecoin regime in line with international timelines, the focus now shifts to implementation, market testing, and integration with existing payment systems. This development represents a notable step in the evolution of digital public money infrastructure alongside ongoing explorations of a potential digital pound.
The framework underscores the Bank of England’s commitment to fostering responsible innovation in a rapidly changing financial landscape. Further details and Codes of Practice will provide additional clarity for issuers preparing to enter the market.