The Bank of England is relaxing part of its tough sterling stablecoin rulebook after heavy pushback from the crypto and payments industry. Instead of capping how much each person can hold, it now plans a temporary £40 billion issuance limit for each major pound‑pegged coin.
In earlier consultations, the Bank proposed strict ownership caps on “systemic” sterling stablecoins, with limits of about £20,000 per individual and £10 million per business. Industry groups warned that these limits were “operationally unworkable” and would make it hard to scale stablecoins for everyday payments. Deputy Governor Sarah Breeden later told lawmakers the Bank was “looking very hard” at other ways to manage risk.
The new draft framework drops those individual caps and instead sets an initial issuance limit of £40 billion per systemic sterling stablecoin. Officials say they will review that ceiling regularly and remove it only once they are confident there is no threat to credit supply or financial stability. The cap is meant to slow explosive growth while still letting one or more large pound‑backed coins reach meaningful scale in the U.K. market.
Softer Reserve Rules, But Still A Tight Regime
The Bank of England is also tweaking its reserve model in response to feedback. Earlier plans would have forced issuers to park 40% of reserves in zero‑interest accounts at the central bank, with the rest in short‑term U.K. government debt. The new language allows up to 70% in interest‑bearing gilts and only 30% in non-interest-bearing BoE deposits, giving issuers more room to earn a return. Regulators argue that the mix still anchors stablecoins in safe assets while making the business model less punitive.
At the same time, the regime remains stricter than in the U.S. or the EU in several ways. The Bank has signaled it will ban self‑custody for systemic sterling stablecoins and limit them to regulated intermediaries such as banks, e‑money firms, and exchanges. It will also only oversee coins judged “systemic,” while non‑sterling tokens and trading‑focused stablecoins like USDT and USDC stay under the Financial Conduct Authority.
Crypto industry groups had warned that the original caps would “limit adoption, push activity overseas, and undermine the UK’s ambition to lead in digital finance.”
The move to a £40 billion issuance limit signals that the Bank heard those concerns, but it also shows it wants hard brakes ready if a sterling stablecoin grows too fast.
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