The Bank of England published its final policy positions and draft rules for systemic stablecoins on Thursday, dropping individual holding caps that had been a point of contention for the industry. Instead, the central bank proposed a temporary £40 billion ($52.9 billion) issuance limit for each systemic stablecoin. The revised framework aims to support growth in the stablecoin sector while maintaining financial stability.
Why the holding caps were removed
Earlier drafts of the rules included strict limits on how many tokens a single user could hold, which drew criticism from stablecoin issuers and investors. The Bank of England scrapped those individual caps after feedback during the consultation process. Regulators now believe that systemic risks are better addressed through issuer-level limits and other safeguards rather than restricting individual holdings. The change is expected to make the UK a more attractive jurisdiction for stablecoin projects.
The temporary issuance limit
Each systemic stablecoin will face a temporary ceiling of £40 billion in total issuance. The Bank of England described this as a transitional measure while it develops a more permanent framework. The limit applies to the entire stablecoin, not to individual users or wallets. Stablecoin issuers will need to demonstrate they can operate within that cap without disrupting the broader financial system. The central bank noted that the limit could be adjusted over time as the market matures and new data becomes available.
What the rules cover
The draft rules apply only to stablecoins deemed systemic — those that could pose risks to the financial system if they fail. They set out requirements for governance, risk management, redemption rights, and reserve assets. Stablecoin issuers must hold high-quality liquid assets equal to the value of tokens in circulation. The Bank of England will supervise compliance and has the power to impose additional conditions on issuers. The rules align with broader international standards being developed by the Financial Stability Board.
Next steps for the sector
The Bank of England is now accepting comments on the draft rules until March 14, 2025. After that, it will finalize the regulations and begin authorizing systemic stablecoin issuers. The first wave of approvals could come in late 2025. Industry participants are watching closely to see how the temporary issuance limit interacts with similar rules from the Financial Conduct Authority, which oversees smaller stablecoins. The central bank has signaled it will revisit the cap after two years.
