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The Bank of England just made one of its most consequential moves in digital asset regulation. It ditched proposed caps on how much any individual or business can hold in sterling stablecoins, replacing that entire approach with a single aggregate issuance limit of £40 billion per systemic stablecoin.
The shift, announced on June 22, represents a meaningful philosophical pivot. Instead of micromanaging who holds what, the BoE is now focused on capping total supply.
What actually changed
The original proposal, floated in a November 2025 consultation, would have capped individual holdings at £20,000 and business holdings at £10 million. Those numbers drew heavy pushback from the industry. The BoE listened. Its final policy statement and draft Code of Practice replaced both limits with the £40 billion per-coin issuance cap.
The reserve requirements got friendlier too. Issuers can now back up to 70% of their stablecoins with short-term UK government debt, up from a previous limit of 60%. The rest must sit as non-interest-bearing deposits at the Bank of England itself.
Deputy Governor Sarah Breeden framed the framework as a meaningful step toward innovation in UK payment systems, emphasizing trust, prompt redemption, and strong consumer protections.
The regulatory architecture
This framework only applies to what the BoE calls “systemic” sterling stablecoins — coins deemed large or interconnected enough to potentially impact financial stability, primarily through the risk of deposit shifts away from traditional banks. Non-systemic stablecoins will be regulated separately under Financial Conduct Authority rules.
A final Code of Practice is targeted for completion by the end of 2026, with the full framework expected to be operational by 2027. Stakeholder feedback on the current draft is due by September 22, 2026.
What this means for investors
The removal of per-holder limits is the headline, but the real story is what it enables. With no ceiling on how much a single institution can hold, the door is now open for banks, asset managers, and corporate treasuries to use sterling stablecoins at meaningful scale. Under the old proposal, a fund managing billions in assets would have been limited to holding £10 million in stablecoins.
The 70% government debt backing requirement also positions UK-regulated stablecoins as relatively safe instruments. A clear, BoE-enforced standard that mandates sovereign debt and central bank deposits as backing is a competitive advantage for any issuer willing to comply.
For existing players like Circle and Tether, the question becomes whether they’ll pursue sterling-denominated products under this framework or leave the opportunity to UK-native competitors. Parking 30% of reserves at the BoE with zero interest is a real cost, but the legitimacy that comes with BoE oversight could be worth the trade-off.
Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.
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