The Bank of England (BoE) on Monday eased parts of its proposed stablecoin regulations in its final policy and draft rules, after industry concerns that the measures could stifle the growth of the emerging sterling-backed stablecoin market.
The central bank dropped plans to impose caps on individual holdings and instead opted to limit the total issuance of each stablecoin, with an initial ceiling set at £40 billion ($52.96 billion).
“The framework supports safe innovation, enabling UK-issued stablecoins to develop as trusted forms of digital money. Alongside other innovations in money and payments, stablecoins could enable faster, cheaper and more flexible services for users, including cross‑border use cases, while supporting new programmable functionality,” said the central bank.
BoE relaxes proposals on backing assets
Following extensive engagement with industry and stakeholders, the Bank of England made targeted revisions to the stablecoin proposals consulted on last year.
The bank explained that the maximum share held in interest‑bearing assets (short-term UK government debt) has been increased from 60 percent to 70 percent, with the remainder in central bank deposits.
These deposits enable issuers to meet redemptions promptly. The change supports more viable business models while still allowing issuers to deal with outflows.
BoE to revisit guardrails once risks to credit provision have been addressed
The Bank of England added that it will safeguard the economy’s access to credit without introducing the temporary stablecoin holding limits it consulted on last year. Instead, a temporary issuance guardrail will apply to each systemic stablecoin, initially set at £40 billion.
This delivers the same policy outcome, while being cheaper and easier to implement, and allowing unrestricted use by households and businesses. This guardrail will be reviewed regularly and removed once risks to credit provision have been addressed.
“This is a major milestone in delivering greater choice and innovation in UK payments. Innovation thrives on trust. And today we’ve set out the foundations of that trust for a new form of money – with prompt redemption, strong protections and central bank support. This is truly a world-leading regime,” said Sarah Breeden, Deputy Governor for Financial Stability.
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UK targets operation by 2027
The Bank of England intends to finalize the Code of Practice by the end of 2026, subject to feedback by September 22, 2026.
It added that further supporting materials will follow alongside continued joint work with the FCA.
This would allow regulated stablecoins to operate in the UK from 2027.
