The Bank of England has announced a significant policy shift that replaces proposed individual and corporate holding limits with a temporary £40 billion ceiling on the total issuance of each systemic stablecoin in the United Kingdom. The new framework, released on 22 June, applies to stablecoins that HM Treasury recognises as systemic and aims to streamline the use of GBP‑denominated digital payment products while still safeguarding the stability of the banking sector.
Under the 2025 proposal, the central bank had planned to enforce a £20,000 cap for individuals and a £10 million cap for corporates, but those limits were never activated and are now formally dropped. Instead, the BoE has adopted an issuance‑based guardrail that caps the total circulating supply of each individual stablecoin product at £40 billion. This figure is calculated against the token supply of each product separately, not against the aggregate market size or a cross‑issuer cap.
The decision to abandon individual holding limits came after a comprehensive consultation that highlighted the operational burden and limited effectiveness of tracking real‑time balances for thousands of users. By focusing on total issuance, the Bank eliminates the need for continuous balance monitoring, reducing compliance costs for issuers and clearinghouses while maintaining a clear ceiling on the amount of digital currency that can be in circulation at any one time.
Central to the BoE’s rationale is the concern that a swift migration of bank deposits into stablecoins could erode liquidity buffers and impair the ability of traditional lenders to fund the economy. To quantify the risk, the Bank ran stress tests that modelled scenarios where banks might fall below the 100 percent Liquidity Coverage Ratio threshold, assess the demand for central bank liquidity borrowing, and evaluate the likelihood of asset sales. The £40 billion ceiling was chosen to provide a protection level comparable to the old holding caps while being far easier to administer.
In addition to the issuance limit, the draft framework retains the requirement that systemic stablecoins be backed on a one‑to‑one basis. Under normal conditions, issuers may hold up to 70 percent of their backing assets in short‑term UK government securities with maturities no longer than six months, while at least 30 percent must be held as deposits at the Bank of England. The deposit portion does not accrue interest, reflecting the design of stablecoins as a payment medium rather than an investment vehicle.
From a market perspective, the new policy is likely to accelerate the deployment of GBP‑based stablecoins by removing the uncertainty surrounding individual holding limits. It also aligns the UK’s regulatory approach with the European Central Bank’s guidance, which emphasises issuance caps over balance limits for systemic stablecoins. The clarity offered by the £40 billion rule will make it easier for issuers to model compliance costs and for regulators to enforce the ceiling with a single, transparent metric.
Looking ahead, the Bank has indicated that the temporary issuance guardrail may be revisited as the stablecoin ecosystem matures and further data become available. Stakeholders can expect ongoing dialogue to refine the balance between innovation and prudential oversight, ensuring that the UK remains a leader in safe and efficient digital payments.
