The Bank of England has scrapped proposed limits on how much an individual or business can hold in systemic sterling stablecoins, replacing them with a temporary £40 billion issuance cap per issuer. The change, part of a revised framework for digital pound-backed tokens, marks a significant shift from earlier plans that would have capped personal holdings at £20,000 and business holdings at £10 million.
Why the old limits didn't stick
Industry groups had argued that the earlier per-user caps would make sterling stablecoins impractical for mass adoption. The £20,000 individual limit would have prevented businesses from using the tokens for payroll or high-value payments, critics said. The Bank's new approach replaces those restrictions with an aggregate ceiling: no single issuer can have more than £40 billion in outstanding systemic stablecoins at any time. That cap is temporary, pending final rules.
What issuers can do with backing assets
Under the revised framework, issuers of systemic sterling stablecoins can hold up to 70% of their backing assets in short-term UK government debt. The remaining 30% must be kept as non-interest-bearing deposits at the Bank of England. That split is designed to balance liquidity and safety, giving issuers some yield while keeping the system stable. The previous proposals did not specify such a ratio.
The UK is trying to position itself as a credible jurisdiction for digital payments, tokenisation, and market infrastructure. But it's racing against the US and EU, both of which have moved faster on digital asset regulation. The stablecoin market today is dominated by dollar-denominated tokens like USDC and USDT. Sterling stablecoins remain tiny by comparison. The Bank's new rules aim to clear a path for them without the old constraints that critics said would choke growth before it started.
What happens next
Final rules are expected before any regulated operations begin. The Bank hasn't set a date yet, but the revised framework opens the door for firms to start preparing applications. The £40 billion cap will stay in place until the Bank determines a permanent approach. That means the next question isn't whether the rules work — it's whether anyone will use them.
