Bank Of England Bets £40B Issuance Cap Can Replace Stablecoin Restrictions

The Bank of England scrapped individual holding caps for sterling stablecoins on Monday, replacing them with a temporary £40 billion issuance limit per coin while easing reserve rules.

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Stablecoin Caps Swapped For Issuance Limit

The central bank published its final policy statement and a draft rulebook Monday.

The package softened measures that issuers had warned could choke a sterling-backed market before it took hold. It covers only systemic coins, those used widely enough in payments to pose financial-stability risks.

It dropped plans to limit how much of a coin any single person or firm could hold, levels floated last November near £20,000 for individuals and £10 million for businesses. Systemic coins will also be barred from self-custody and limited to regulated firms such as banks and exchanges.

The £40 billion ceiling, worth about $52.8 billion, now applies to total issuance per coin. Officials framed it as a temporary guardrail, not a curb on daily use, and pledged to lift it once risks to bank lending fade. Issuers can also hold up to 70% of reserves in short-term UK government debt, up from 60%, with the rest parked at the Bank.

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Breeden, Coinbase Back Final Regime

Deputy Governor Sarah Breeden welcomed the framework, calling it a boost for competition in UK payments. The rules still bar issuers from paying interest, though payment-linked rewards remain allowed, and demand face-value redemption within 24 hours.

Coinbase's head of policy for Europe, Katie Harries, said the rules rank among "the strongest stablecoin regimes in the world." She also pressed for clarity on how long the per-coin cap will last.

The Bank has long warned that widely used stablecoins could pull deposits from lenders and squeeze credit.

Sterling Stablecoins Eye 2027 Market Launch

The reversal followed months of lobbying from the crypto industry. Breeden conceded in May the Bank was "looking very hard" at its caps, and officials now aim to finalize the rules before regulated coins launch in 2027.

Dollar-pegged tokens such as Tether (USDT) and USD Coin (USDC) still dominate the market and stay under the Financial Conduct Authority, leaving the UK the only major economy capping issuance of a coin in its own currency.

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