BoE Trades Holding Caps for a £40B Issuance Cap, Stablecoin Limits Hit "Unrestricted" 🏦

The Bank of England published a policy statement and draft rules on June 22, scrapping proposed wallet-level limits for systemic stablecoins and replacing them with a temporary £40 billion ($52.8 billion) issuance cap per token. The central bank said the guardrail will be reviewed regularly and removed once risks to credit provision have been addressed. HM Treasury will determine which stablecoins fall within the systemic regime, with the final Code of Practice expected by the end of 2026 ahead of a planned 2027 rollout.

Under the updated framework, systemic stablecoin issuers will be permitted to hold up to 70% of reserves in short-term UK government debt, up from the 60% proposed during the BoE's November 2025 consultation. The remaining reserves must be held in deposits at the Bank of England. Respondents to that consultation had warned the earlier holding limits of £20,000 per individual and £10 million per business could restrict usability and create operational challenges for issuers, prompting the policy shift.

The Bank said the new approach is intended to achieve the same policy objective while allowing unrestricted use by households and businesses. Non-systemic stablecoins used mainly for crypto trading will remain under the supervision of the Financial Conduct Authority, and the BoE and FCA are developing a coordinated framework to allow firms to transition from non-systemic to systemic status as they scale. The consultation period on the draft rules runs until September.

Deputy Governor Sarah Breeden, who oversees financial stability, described the framework as "a major milestone" for innovation in UK payments, adding that the rules lay the foundations for trust in a new form of money through prompt redemption, strong protections, and central bank support. The BoE is set to finalize its rulebook by the end of 2026.