Bank of England Eases Stablecoin Rules, Sets £40 Billion Issuer Limit

The Bank of England has softened its proposed regulatory framework for sterling-denominated stablecoins. The central bank dropped plans to cap individual stablecoin holdings and instead set a total issuance limit per stablecoin.

Bank of England Sets £40 Billion Stablecoin Issuer Cap in Final Policy

On June 22, the Bank of England (BoE) released its policy statement and draft rules for regulating stablecoin issuers. The BOE scrapped plans for holding limits on sterling stablecoins for individuals and firms, and instead introduced a £40 billion ($52.8 billion) cap on each stablecoin issuance.

In a new draft code of practice for the use of systemic stablecoins, providers will also benefit from less strict terms than previously proposed on the blend of backing assets required. It will allow stablecoins to be backed by 70% short-term gilts and 30% unremunerated central bank reserves, having previously recommended a 60:40 split.

The Bank of England also planned to impose temporary holding limits of £20,000 per individual and £10 million for businesses. However, this sparked massive criticism from crypto industry participants and lawmakers.

“This is a major milestone in delivering greater choice and innovation in UK payments. Innovation thrives on trust. And today we’ve set out the foundations of that trust for a new form of money – with prompt redemption, strong protections and central bank support,” said Sarah Breeden, Deputy Governor for Financial Stability.

Stablecoins have become the backbone of crypto investing and here are the 10 best ways to earn money with stablecoin holdings.

Changes in the New Rules and Next Steps

The Bank of England has dropped individual and business caps on stablecoin holdings in the new rules. It marks one of the major changes to address limits for retail and corporate use.

Moreover, the central bank increased the maximum share held in interest‑bearing assets, such as short-term UK government debt, to 70%. The remaining 30% of backing assets will be held as deposits at the BoE.

The Bank of England has set an initial £40 billion temporary issuance guardrail per stablecoin issuer. BOE claims the limit is likely to get removed or increased once the central bank completes its review and ensures risks to credit provision are addressed.

The bank will seek feedback to finalize the rule by 2026 end, while working with the FCA. This would allow regulated stablecoins to operate in the UK from 2027.

Meanwhile, US crypto market participants await the CLARITY Act passing by the full Senate floor before the recess. White House crypto advisor Patrick Witt also shared an optimistic note for passing by July 4.