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The Bank of England has abandoned proposed limits on individual stablecoin holdings and replaced them with a £40 billion ceiling on total systemic issuance, easing a regulatory framework that had drawn criticism from lawmakers and digital finance industry participants.
The updated BoE stablecoin rules remove previously proposed limits on individual holdings and instead introduce a temporary cap of £40 billion on the total issuance of a systemic stablecoin. The central bank also eased reserve requirements, allowing issuers to hold a larger share of backing assets in short-term government debt.
The move follows months of consultation and feedback from stakeholders who argued that earlier proposals could undermine the development of sterling-backed stablecoins.
The latest revisions to BoE stablecoin rules represent a notable departure from proposals published in late 2025. Earlier plans included limits of £20,000 for individuals and £10 million for businesses, alongside stricter requirements for reserve assets.
Under the revised framework, the Bank of England has abandoned those holding caps in favour of a £40 billion ceiling on total issuance per systemic stablecoin. It also raised the proportion of backing assets that can be invested in short-term UK government debt from 60% to 70%, while requiring the remaining 30% to be held in non-interest-bearing central bank deposits.
The changes come after concerns from lawmakers and industry groups that stringent restrictions could hamper the UK’s competitiveness in digital finance. Earlier this month, members of the House of Lords urged regulators to adopt a more flexible approach toward the emerging sector.
Officials stressed that the revised BoE stablecoin rules are designed to support innovation without compromising financial stability.
“Today’s proposals mark a pivotal step towards implementing the UK’s stablecoin regime next year. Our objective remains to support innovation and build trust in this emerging form of money,” — Sarah Breeden, Deputy Governor for Financial Stability, Bank of England.
Following the publication of the final framework, Breeden again emphasized the importance of ensuring confidence in digital payment systems.
“These changes are part of establishing a trustworthy framework for new digital forms of money,” — Sarah Breeden, Deputy Governor for Financial Stability, Bank of England.
The central bank has repeatedly argued that stablecoins used widely for payments should provide the same level of confidence as traditional forms of money. According to the Bank, rapid redemption mechanisms and strong reserve arrangements are essential for preserving public trust.
Pressure to reconsider the original BoE stablecoin rules intensified in recent months.
A cross-party committee in the House of Lords warned that excessive restrictions could discourage innovation in an industry still in its early stages. Committee Chair Sheila Noakes questioned the Bank’s earlier proposals and called for a less prescriptive approach.
In May, Breeden acknowledged that policymakers were reviewing alternative approaches after receiving extensive feedback from the sector.
“We are keen to create a regime where stablecoins can succeed and can deliver benefits to users. But it is money, and we want to make sure that this new form of money is safe,” — Sarah Breeden, Deputy Governor for Financial Stability, Bank of England.
The softened BoE stablecoin rules are viewed as an attempt to strike a balance between encouraging innovation and protecting the broader financial system.
The updated BoE stablecoin rules are expected to form the foundation of the UK’s digital asset framework, with consultations remaining open until September. Final regulations are anticipated later this year, paving the way for regulated stablecoin activity from 2027.
Although sterling-backed stablecoins account for less than 0.5% of the global stablecoin market, the Bank of England believes they could eventually support faster and cheaper payments both domestically and internationally.
Governor Andrew Bailey has consistently maintained that widely used stablecoins should be regulated in a manner comparable to traditional forms of money.
“Widely-used stablecoins need to be regulated like money,” — Andrew Bailey, Governor, Bank of England.
As the UK moves closer to implementing its regulatory regime, the revised BoE stablecoin rules signal a willingness by policymakers to adapt their approach in response to industry concerns while preserving safeguards for financial stability.
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