Bank of England drops stablecoin holding limits, sets £40bn issuance cap

The Bank of England has published a revised policy statement and draft Code of Practice for systemic stablecoins. Individual holding limits of £20,000 for private users and £10 million for businesses have been removed and replaced with a temporary aggregate issuance cap of £40 billion per stablecoin product. The regulator also eased reserve‑asset requirements, allowing up to 70 % of reserves to be held in short‑term gilts and reducing the non‑interest‑bearing central‑bank deposit share to 30 %.

Issuers must still provide 24‑hour redemption at face value, maintain two statutory trusts – one for coin‑holder protection and another for administrative costs – and can access an emergency liquidity backstop from the central bank. The framework aims for a regulated sterling‑backed stablecoin regime to launch by 2027, with final rules expected by the end of 2026. Industry observers note remaining questions about the duration of the aggregate cap and whether stablecoins will be permitted for settlement in core wholesale markets. The BoE’s approach sits between U.S. and EU regulatory models, allowing non‑bank fintechs greater flexibility while banks must continue to issue stablecoins through separate insolvency‑remote entities.