The Bank of England is radically changing the rules for stablecoins: removing ownership limits and introducing an issuance cap of £40 billion.
The Bank of England has published the final version of its policy and draft rules for systemic stablecoins, making significant adjustments to its initial proposals. The key change is a complete abandonment of individual holding limits for both individuals and legal entities. Instead, the regulator is introducing a temporary overall issuance limit for each systemic stablecoin, set at £40 billion (approximately $52.8 billion).
As a reminder, in the November 2025 consultation paper, the Bank of England proposed limiting holdings of systemic stablecoins to £20,000 for individuals and £10 million for businesses. Industry associations sharply criticized these proposals, rightly pointing out that rigid caps make real-world use cases practically impossible. The regulator listened to the criticism and chose a more effective and less costly path.
The issuance limit directly regulates the issuer, rather than tracking each user's account. This is much easier to enforce in decentralized networks. The Bank of England will regularly review this limit and will remove it once risks to the lending of the economy are eliminated. The choice of the £40 billion mark is not arbitrary: it 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, and this amount represents roughly 10% of the volumes processed through the CHAPS system.
Additionally, the Bank of England has slightly relaxed the reserve backing requirements. The share of assets that issuers can hold in short-term government debt has been increased to 70% from the previously proposed 60%. The remaining portion must be held as non-interest-bearing deposits at the central bank. Previously applicable rules made the economics of UK issuance unattractive compared to competitors in the US and EU, as a significant portion of reserves generated no income. This easing reduces that burden, although part of the reserves still remains unpaid.
The Bank of England and the Financial Conduct Authority (FCA) are jointly building a comprehensive regime, including a managed transition for companies from non-systemic to systemic status. Final rules are expected to be completed by the end of 2026.
My analysis: This decision is a strategic move that places the UK on par with the most progressive jurisdictions in stablecoin regulation. Abandoning rigid holding limits in favor of an issuance cap is a pragmatic and forward-looking approach that encourages innovation without creating excessive regulatory burdens for end users. If the Fed and the ECB do not follow this example, London risks becoming the new global hub for stablecoin issuance.