The Bank of England has scrapped proposed individual and business holding limits for sterling-backed stablecoins, narrowing its regulatory focus to a single product-level cap. Each systemic stablecoin will be subject to a £40 billion issuance maximum — a ceiling that still leaves room for growth but sets a firm boundary.
What changed and why
Earlier drafts had floated per-user limits meant to prevent runs on stablecoins. The central bank dropped those after industry feedback argued they'd hamper adoption. Instead, the new framework targets the total supply of any stablecoin deemed systemically important. Up to 70% of backing assets can sit in interest-bearing short-term UK government debt, with at least 30% held in central bank deposits — a structure that mirrors traditional money market fund rules.
The move clears a path for regulated stablecoins to operate in the UK from 2027, but the final rulebook won't be ready until late next year.
The £40 billion ceiling in context
Forty billion pounds sounds large — until you compare it to Tether's USDT, which has a market cap of roughly $186 billion. That's nearly four times the proposed per-product limit. The Bank of England is effectively saying no single sterling stablecoin should dominate the way USDT dominates dollar-pegged tokens. Multiple products could each hit the cap, but the regulator is signaling that scale brings scrutiny.
The issuance limit applies to systemic stablecoins only. Smaller products may face lighter requirements, but the details remain under consultation.
What the sandbox firms are doing
The Financial Conduct Authority's stablecoin sandbox already includes firms like Monee, ReStabilise, Revolut, and VVTX. These companies are testing real-world operations under regulatory supervision. Their experience will likely shape the final rules. Revolut's involvement is notable — the digital banking giant has pushed into crypto services before, and a regulated stablecoin would fit its product lineup.
Monee and ReStabilise are smaller players, while VVTX hasn't publicly detailed its plans. The sandbox gives the FCA a live test bed before full authorization begins.
Timeline and next steps
The Bank of England's draft rules consultation closes on September 22, 2026. The final Code of Practice is supposed to be wrapped up by the end of that year. That means regulated sterling stablecoins probably won't reach consumers until sometime in 2027 — a timeline that gives both issuers and regulators time to hash out the details.
One unresolved question: how the £40 billion cap interacts with stablecoins that are issued in multiple currencies. If a product offers both sterling and dollar versions, does the ceiling apply to the sterling tranche alone, or to the whole scheme? The draft rules don't address that directly. The consultation period may force the Bank of England to clarify.
