The Bank of England published its final policy and draft rules for systemic stablecoins, dropping individual ownership limits and introducing a £40 billion total issuance cap. The regulator also eased reserve asset requirements to allow up to 70% in short-term UK government debt and said it intends to finalize the rules by the end of 2026. The policy shift follows industry criticism of ownership caps proposed in a November 2025 consultation, which warned that strict limits would hinder real-world use cases. Sarah Breeden, Deputy Governor for Financial Stability, called the move a significant milestone in supporting choice and innovation in UK payments. The updated framework represents the Bank of England and Financial Conduct Authority's joint effort to develop a broader stablecoin regime with a managed transition for firms moving from non-systemic to systemic status.
Bank of England Replaces Ownership Limits With £40 Billion Issuance Cap
In its November 2025 consultation, the Bank of England proposed ownership caps of £20,000 for individuals and £10 million for businesses using systemic stablecoins. Those limits have now been removed. Industry groups had strongly criticized the proposal, warning that strict ownership caps would make many real-world use cases difficult or impossible.
Instead, the regulator introduced a temporary cap on the total supply of each systemic stablecoin. At launch, that cap will be set at £40 billion per issuer. The Bank of England said this approach should achieve a similar risk-management outcome while being cheaper and easier to implement. It also allows individuals and businesses to use stablecoins without direct ownership restrictions.
The issuance cap will be managed at the issuer level rather than by tracking every user's balance. This makes the rule easier to enforce, especially across distributed or decentralized networks. The Bank of England said it will regularly review the limit and remove it once risks to credit supply in the wider economy have been sufficiently addressed.
Bank of England Sets £40 Billion Cap to Support Payment System Scale
The Bank of England said the £40 billion limit should allow systemic stablecoin issuers to operate at a viable scale and support daily transaction volumes comparable to other major UK payment systems. For comparison, the regulator pointed to average daily volumes in Faster Payments and card schemes, which are around £1.4 billion to £2.2 billion.
The proposed cap also represents roughly 10% of the average daily value processed through CHAPS. According to the Bank of England, this level should allow systemic stablecoins to be used for the cash leg of settlements in the Digital Securities Sandbox without creating unnecessary restrictions.
The regulator stressed that the issuance cap is intended to be temporary. It expects the limit to be relaxed and eventually removed once the real impact of stablecoins on the economy becomes clearer, including how banks adjust their funding models in response.
Bank of England Eases Reserve Requirements to 70% UK Government Debt
The Bank of England also eased part of its proposed reserve framework. Systemic stablecoin issuers will now be allowed to hold up to 70% of backing assets in short-term UK government debt, up from the previously proposed 60%. The remaining portion must be held as interest-free deposits at the central bank.
Earlier proposals had raised concerns that the UK regime could be less attractive than those in the US and EU, since a significant share of reserves would generate no income. The updated framework reduces that burden, although issuers will still have to hold part of their reserves in non-interest-bearing central bank deposits.
The Bank of England and the Financial Conduct Authority are jointly developing a broader stablecoin regime, including a managed transition for firms moving from non-systemic to systemic status. Further details are expected to be published alongside the FCA's final rules.
FAQ
What did the Bank of England change in its stablecoin policy?
The Bank of England dropped individual ownership limits of £20,000 for individuals and £10 million for businesses, replacing them with a £40 billion total issuance cap per systemic stablecoin issuer. The regulator also eased reserve requirements to allow up to 70% in short-term UK government debt, up from 60%.
Why did the Bank of England set the issuance cap at £40 billion?
The Bank of England said the £40 billion limit should allow systemic stablecoin issuers to operate at a viable scale and support daily transaction volumes comparable to other major UK payment systems. The cap represents roughly 10% of the average daily value processed through CHAPS and aligns with average daily volumes in Faster Payments and card schemes, which are around £1.4 billion to £2.2 billion.
When will the Bank of England finalize the stablecoin rules?
The Bank of England said it intends to finalize the rules by the end of 2026. The issuance cap is temporary and will be reviewed regularly, with plans to relax and eventually remove it once the real impact of stablecoins on the economy becomes clearer.
