The Bank of England has approved a new regime for stablecoins: easing reserves and a cap of £40 billion.
The Bank of England has officially introduced updated rules for systemically important stablecoins denominated in pounds sterling. The regulator has revised key collateral requirements and introduced temporary issuance limits, aiming to balance innovation and financial stability.
In the final version of the document, the authority significantly eased the reserve structure. Previously, it was assumed that 40% of issuers' funds should be held in non-interest-bearing deposits at the Central Bank. This share has now been reduced to 30%. The remaining 70% can be placed in short-term UK government bonds with maturities of up to six months. This is a step toward the market: such securities generate income, making the issuers' business model more sustainable.
However, the regulator rejected the idea of allowing deposits in commercial banks to be used as collateral. In its assessment, this creates unacceptable risks for the financial system in the event of a liquidity crisis — this approach completely eliminates the possibility of cascading failures.
Instead of individual limits on coin holdings for citizens and businesses, the Bank of England is introducing a general issuance cap per stablecoin of £40 billion. This is a temporary "safeguard" that will be reviewed as the market adapts. In the future, the limit may be increased or even abolished.
Issuers are required to ensure holders' right to redeem coins for fiat at par within 24 hours of a request. To support the sector, an emergency liquidity mechanism will be launched in 2027: companies will be able to obtain loans from the Central Bank backed by government bonds.
The final set of rules is expected to be approved by the end of 2026. The document has been developed jointly with the Financial Conduct Authority (FCA), and the agencies will soon present a joint regulatory framework for the market.
Political Context
The publication of the rules coincides with a political crisis: Prime Minister Keir Starmer resigned after Labour's defeat in local elections. The cause was economic problems — inflation in Britain rose due to energy prices and the blockade of the Strait of Hormuz. Andy Burnham may become the new head of government. Recall that earlier the Bank of England stated its focus on RWA to modernize the economy — now we are seeing the first practical steps.
My expertise: Reducing the share of non-interest-bearing deposits to 30% is a reasonable compromise that increases the attractiveness of stablecoins for institutional players without sacrificing reliability. However, the £40 billion cap could become a bottleneck for major players like Circle or Tether if they decide to enter the British market. Keep an eye on the dynamics — this is a key indicator of regulatory maturity.