Bank of England Caps UK Stablecoin Issuance at £40B, Lets Issuers Stash 70% in Gilts 🏦

The Bank of England published a policy statement and draft rules on Monday outlining how regulated pound-backed stablecoins would operate in the United Kingdom, introducing a temporary 40-billion-pound ($52.8 billion) issuance cap for systemic stablecoins. The BoE defines systemic stablecoins as those widely used in payments that may pose risks to the UK's financial stability, with HM Treasury responsible for determining whether a token falls within the regime. Under the new framework, systemic stablecoin issuers will be allowed to hold up to 70% of reserves in interest-bearing government debt, up from 60% under the previous proposal. "This guardrail will be reviewed regularly and removed once risks to credit provision have been addressed," the central bank said in a press release.

The issuance cap replaces the holding limits proposed in the BoE's November 2025 consultation, which would have restricted individuals to 20,000 pounds per stablecoin and businesses to 10 million pounds per stablecoin. At the time, the Bank argued the limits were needed to prevent large-scale shifts of deposits out of the banking system, which could reduce credit availability for households and businesses. Respondents to the consultation warned that the restrictions could limit usability of stablecoins and create operational challenges for issuers, prompting the Bank to revise its approach while retaining the same policy objective. The regime will apply only to stablecoins deemed systemic, while non-systemic stablecoins used mainly for crypto trading will remain under the Financial Conduct Authority's supervision.

The publication moves the UK closer to launching a dedicated regulatory framework for stablecoins, with the BoE aiming to finalize its rulebook by the end of 2026 ahead of a planned 2027 rollout. In May, Deputy Governor Sarah Breeden said the BoE was reconsidering its proposed holding limits and reserve requirements following feedback from digital asset companies, which argued the restrictions could hinder adoption and make UK-issued stablecoins less competitive with dollar-backed rivals. Critics have separately told UK Lords that stablecoins are not future money, according to related reporting on the consultation.