BoE raises reserve limit for stablecoins, sets £40bn cap

On Monday the Bank of England published draft rules for regulated pound-backed stablecoins that HM Treasury determines are systemic. The rules allow issuers to hold up to 70% of reserves in interest-bearing government debt and introduce a temporary £40 billion issuance cap (about $52.8 billion).

The issuance guardrail replaces proposed per-user and per-business holding limits set out in the Bank’s November 2025 consultation. Those earlier proposals would have limited individuals to £20,000 per stablecoin and businesses to £10 million per stablecoin.

The Bank argued the original limits were intended to prevent large shifts of deposits out of banks that could reduce credit available to households and firms. Respondents to the consultation warned the limits could reduce stablecoin usability and create operational challenges for issuers.

Under the draft rules, the single £40 billion issuance cap will be kept under regular review. The draft describes the cap as temporary and intended to achieve the same policy objective as the earlier holding limits while avoiding constraints respondents warned could hinder adoption of UK-issued stablecoins.

The draft raises the permitted share of reserves held in interest-bearing government debt from 60% to 70%, substituting the issuance guardrail for the individual and business holding limits.

The Bank defines systemic stablecoins as tokens that are widely used in payments and that could pose risks to the UK’s financial stability. HM Treasury will decide which stablecoins fall within the systemic regime. Stablecoins judged non-systemic and used mainly for crypto trading will remain under the Financial Conduct Authority’s supervision.

Deputy Governor Sarah Breeden signalled in May that the Bank was reconsidering aspects of the consultation after receiving industry feedback about competitiveness and practicality. The Bank plans to finalise the rulebook by the end of 2026 ahead of a planned rollout in 2027.

“This guardrail will be reviewed regularly and removed once risks to credit provision have been addressed,” the central bank wrote in its press release.

The draft policy moves the UK closer to a dedicated regulatory framework for pound-backed stablecoins and sets out review points for the temporary cap and reserve rules.