The Bank of England has scrapped its earlier plan to cap how much individuals and businesses could hold in UK-regulated stablecoins, replacing those limits with a single £40 billion ($52.9 billion) issuance ceiling per systemic coin. The move, announced in a draft policy statement, removes proposed per-user caps of £20,000 for households and £10 million for businesses, replacing them with a uniform limit on the total supply a stablecoin can issue.
Why the caps changed
The original per-holder limits were intended to contain risks to financial stability, but industry feedback argued they would stifle everyday use. Under the new framework, any stablecoin deemed systemically important—meaning it could disrupt payments or credit markets—cannot have more than £40 billion worth of tokens in circulation at any time. The central bank said the cap is designed to shield bank lending while still allowing households and firms to transact freely in sterling-denominated digital currencies.
The UK now stands alone among major economies in capping the issuance of a stablecoin pegged to its own currency. The U.S. GENIUS Act and the European Union's MiCA regulation do not impose such limits on domestic-currency stablecoins.
Reserve requirements and redemption rules
Issuers will have to back every stablecoin with a specific mix of assets: 70% short-term UK government debt and 30% in deposits held at the Bank of England. They cannot pay interest on the stablecoins themselves, but payment-linked rewards—like cashback or loyalty points—are allowed. Redemptions must be processed within 24 hours. The central bank hopes these rules will give users confidence that their coins can always be converted back to pounds quickly.
About 99% of all stablecoins in circulation worldwide are dollar-denominated, according to a November 2025 European Central Bank report. Sterling stablecoins are still a tiny slice of the market, but the UK Treasury and the Debt Management Office have flagged them as a potential new source of structural demand for Treasury bills. Officials are already planning new short-dated government debt issuance to meet that demand if stablecoins take off.
Timeline and next steps
The Bank of England aims to finalize a Code of Practice for stablecoin regulation by the end of 2026. Feedback on the current draft is open until 22 September 2025. The first issuers could begin operating under the new regime in 2027.
For now, the £40 billion cap is a placeholder; the central bank says it may adjust the number as the market develops. The question hanging over the entire framework is whether that ceiling is high enough to let a new sterling stablecoin ecosystem grow—or whether it will choke off the very innovation the rules are meant to encourage.
