- The Bank of England replaces user-level holding caps with a £40B ceiling for each systemic coin.
- Systemic issuers may invest 70% of reserves in short-term UK government debt.
- Redemptions must be completed instantly where possible or within a rolling 24 hours.
The Bank of England has abandoned limits on individual stablecoin holdings, replacing them with a temporary £40 billion ceiling for each systemic coin. The change removes caps of £20,000 per person and £10 million per business, which respondents called costly and difficult to enforce. Users may transact without restrictions on size, frequency, or purpose, subject to other laws.
£40B Supply Ceiling Replaces Individual Holding Limits
The model shifts regulatory control from individual wallets to total issuance. According to the BoE report, each qualifying stablecoin must remain below the £40 billion threshold. The Bank further noted that stress testing showed the ceiling could offer similar protection against deposit outflows from commercial banks.
Despite these safeguards, officials remain concerned that a broader shift toward digital money could weaken banks’ liquidity, reduce lending capacity, and increase borrowing costs. At the same time, the Bank noted that a £40 billion limit would still allow stablecoins to support substantial payment activity, comparable to major payment systems such as Faster Payments and card networks, which process between £1.4 billion and £2.2 billion in daily transactions.
It would also equal about 10% of the average daily value settled through the CHAPS payment system. The limit will remain temporary and undergo review before removal once risks to credit provision and financial stability are considered manageable.
Reserve and Redemption Rules Tighten Issuer Safeguards
Notably, systemic issuers may place 70% of backing assets in short-term sterling-denominated UK government debt, up from the previously proposed 60% limit. Those securities must mature within six months, and at least 30% of reserves must remain in unremunerated deposits at the Bank of England.
Meanwhile, commercial bank deposits remain excluded from eligible reserve assets, while every token must retain one-to-one backing. Customer assets must be segregated through statutory trusts, giving holders a direct legal claim against the issuer if the business fails.
Similarly, valid redemption requests should be completed immediately where possible, or within a rolling 24-hour period when instant settlement is unavailable. Nonetheless, systemic issuers cannot pay interest simply for holding tokens, although transaction-based rewards may still be offered.
Overall, the framework will cover stablecoins designated as systemic by HM Treasury and jointly supervised by the Bank of England and Financial Conduct Authority. Non-systemic coins, on the other hand, will remain under FCA oversight. Feedback closes September 22, with final rules planned for late 2026 and operations expected in 2027.
Related: Bank of England Warns Stablecoin Growth Could Threaten Financial Stability
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