Bank of England Abandons Stablecoin Holding Limits, Imposes £40 Billion Issuance Cap

U.K. authorities have dropped earlier plans for strict per-user and corporate restrictions on stablecoins, opting instead for a temporary ceiling on overall issuance.

The central bank scraps proposed retail and corporate holding limits. Officials eliminated the suggested £20,000 ($27,000) ceiling for individuals along with the £10 million ceiling for businesses. The shift follows lobbying from the crypto sector and a recent warning from the House of Lords Financial Services Regulation Committee that the measures might undermine issuer viability.

The policy change comes after a consultation that closed earlier this month. Authorities accepted arguments that the initial curbs would damage business models and reduce competitiveness on the global stage.

New framework introduces temporary issuance guardrail of £40 billion. Policymakers will now restrict any single systemic stablecoin to £40 billion ($50.6 billion) in total circulation rather than limiting end-user amounts. This macro-level safeguard seeks to shield the wider U.K. credit system from abrupt outflows of capital while still promoting innovation and expansion.

Regulators plan to gradually reduce and ultimately remove the ceiling once the sector gains stability. The updated approach precedes comprehensive U.K. crypto legislation slated for 2027.

Backing requirements relaxed to improve reserve returns. Supervisors reduced the mandated portion of non-interest-bearing central bank deposits to 30 percent. Issuers may therefore direct as much as 70 percent of reserves toward short-term U.K. government debt maturing in less than six months.

Although firms can capture returns from these T-bills, they remain prohibited from distributing interest or dividends straight to coin holders simply for ownership. The institution does permit transaction-linked incentives such as cash-back tokens or loyalty points delivered through Web3 applications.

Stablecoin rollout eyed for 2027 pending final input. A last comment period ends in September 2026 before the regime is finalized. The adjustments represent a win for digital-asset advocates who had described the first proposal as overly cautious and likely to hamper progress.

Neither ordinary consumers nor major enterprises will encounter curbs on transaction volume, frequency or category under the revised stance.