The Bank of England on Monday released its final policy stance on systemic stablecoins, replacing earlier proposals that limited how many tokens a single user could hold with a new ceiling on total issuance per firm. The central bank also published a draft Code of Practice laying out operational expectations for issuers. The shift marks a significant change from the consultation stage, where regulators had floated per-person holding caps as a way to contain risk.
Why the cap changed
The old approach would have restricted how many stablecoins any one person could own, effectively capping individual exposure. Under the new framework, the Bank sets a maximum on the total amount a systemic issuer can put into circulation. That means the limit applies at the company level, not the wallet level. Industry feedback during the consultation period likely drove the revision, though the Bank did not name specific critics in its statement. The change gives issuers more flexibility to manage distribution while still keeping aggregate risk in check.
A looser reserve mix
The rules also include a more generous reserve-asset mix than what the Bank proposed earlier. Systemic stablecoin issuers will now be allowed to hold a broader range of high-quality liquid assets to back their tokens. The previous consultation had stricter requirements, limiting reserves largely to cash and short-term government debt. The updated policy allows for certain other assets, though the Bank still demands that reserves be easily convertible and low risk. The move could make compliance cheaper for firms, but critics might argue it weakens consumer protections.
What the Code of Practice covers
The draft Code of Practice sets out governance, risk management, and operational resilience standards. It covers things like how issuers should handle redemption requests, what data they must report to regulators, and how they test their systems for stress. The Bank says the code is meant to ensure that systemic stablecoins do not threaten financial stability. It applies only to issuers designated as systemic by the Bank — smaller players won't have to follow it, at least not yet.
Feedback window now open
The Bank is accepting comments on the draft Code of Practice and the final policy statement. Industry participants have a set period to file written responses; the exact deadline was not given in Monday's release, but the Bank typically allows several weeks. Once the feedback is reviewed, the rules will take effect. For now, stablecoin issuers eyeing the UK market have a clearer — but still evolving — regulatory path.
