Bank of England Drops Stablecoin Holding Caps but Keeps $53 Billion Issuance Limit

The Bank of England has scrapped its proposed holding caps for UK stablecoins, replacing them with a temporary £40 billion ($52.9 billion) limit on how much of any single systemic coin can be issued.

The change arrived Monday with a draft Code of Practice. It eases a rule that worried issuers. Yet it leaves Britain capping issuance of its own currency stablecoin, something neither the US nor the EU does.

From Per-User Caps to a Single Ceiling

In November 2025, the central bank proposed limiting individuals to £20,000 and businesses to £10 million per coin. Issuers called the plan costly and hard to enforce.

The reversal followed pressure at home. In June, the House of Lords Financial Services Regulation Committee urged the Bank to reconsider the limits. It warned they diverged from global norms and had alarmed crypto founders.

The Bank has now swapped those proposed holding limits for one £40 billion ceiling per coin. It says the cap shields bank lending while letting households and firms transact freely.

Why UK Stablecoin Rules Stand Alone

The contrast abroad is sharp. The US GENIUS Act, signed in July 2025, demands full cash and Treasury reserves but caps no issuance.

Europe’s MiCA stablecoin rules cap only foreign-currency coins used heavily for payments, a brake meant to defend the euro. They place no ceiling on euro stablecoins themselves.

That leaves the UK alone in capping issuance of a coin in its own currency. It is fencing a market that barely exists in sterling.

About 99% of stablecoins in circulation are dollar-denominated, the ECB reported in November.

A ceiling on supply restrains the issuer, not the user. Even that softer form of stablecoin holding caps has no parallel among big economies.

The Bigger Test is Tokenization

Issuers must back coins with 70% short-term UK government debt and 30% in deposits at the central bank. They cannot pay interest, though payment-linked rewards stay allowed.

That backing rule reaches into the gilt market. The Treasury and the Debt Management Office have flagged sterling stablecoins as possible structural demand for Treasury bills. Both plan new short-dated issuance to meet it.

Coins used mainly for trading, such as Tether (USDT) and USD Coin (USDC), stay under the Financial Conduct Authority. Redemptions must clear within 24 hours of a complete request.

The unresolved question is whether these coins can settle wholesale market trades. That answer will shape the country’s tokenization plans, and the Bank says the work continues.

“This is a major milestone in delivering greater choice and innovation in UK payments… This is truly a world leading regime,” Sarah Breeden, the Bank’s Deputy Governor for Financial Stability, said the regime builds trust for a new form of money.

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Feedback on the draft closes 22 September. The Bank aims to finalize the code by the end of 2026. That keeps the UK’s 2026 stablecoin timeline on track for the first issuers in 2027.

The supply cap lasting that long may decide if sterling stablecoins scale at home or grow elsewhere.

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