The Bank of England is rewriting the rules for stablecoins: removing limits on ownership and introducing a new issuance cap.
The Bank of England has presented the final version of its policy on systemic stablecoins, and this is perhaps the most significant signal for the UK crypto industry in recent months. The regulator not only abandoned the previously proposed strict limits on individual holdings but also introduced a fundamentally new control mechanism — a temporary issuance cap for each stablecoin, set at £40 billion (approximately $52.8 billion).
As a reminder, in the November 2025 consultation paper, the Bank of England proposed limiting individual holdings of systemic stablecoins to £20,000 and business holdings to £10 million. The industry rightly pointed out that such limits render stablecoins useless for real-world use cases. The regulator heeded the criticism and completely removed these restrictions.
From wallet surveillance to issuer control
Instead of tracking each user's account, the Bank of England decided to regulate the issuer directly. The temporary issuance cap of £40 billion per systemic stablecoin is, in essence, the permitted volume of token issuance. This approach is not only cheaper and easier to administer but also critically important for decentralized networks, where tracking the balances of every wallet is technically challenging. The regulator emphasizes that the threshold will be regularly reviewed and eventually removed once the risks to economic lending become clear and manageable.
Why exactly £40 billion?
The figure was not chosen randomly. The Bank of England explained that £40 billion is a volume that allows issuers to run a viable business and support a daily transaction volume comparable to other systemic payment systems in the UK. For comparison, the average daily figures for Faster Payments and card schemes are around £1.4–2.2 billion. Meanwhile, £40 billion is approximately 10% of the average daily volumes processed through the CHAPS system, used for large interbank transfers.
Easing of reserve requirements
The Bank of England also slightly relaxed reserve requirements. The share of assets that issuers can hold in short-term government debt has been increased from 60% to 70%. Previously, stricter rules made the economics of UK stablecoin issuance unattractive compared to competitors in the US and EU, as a significant portion of reserves generated no income. Now the burden is reduced, although part of the reserves still remains non-interest-bearing.
In conjunction with the Financial Conduct Authority (FCA), the Bank of England is building a comprehensive regime, including a managed transition for companies from non-systemic to systemic status. The final FCA rules will be published separately. The process is planned to be completed by the end of 2026.
My comment: This decision is a clear compromise between the desire to control risks and the need not to stifle innovation outright. Abandoning individual limits in favor of an issuance cap is a pragmatic step that makes the UK one of the most attractive jurisdictions for stablecoin issuers, especially compared to the stricter approaches in the EU. However, the temporary nature of the cap leaves room for maneuver: once the market demonstrates its resilience, the restrictions will be lifted. This is a signal to the market that the regulator is open to dialogue and adaptation.