Bank of England Drops Stablecoin Holding Caps, Sets Issuer Limit Instead

The Bank of England has reversed its plan to restrict how much stablecoin users and businesses can hold. Instead of individual and corporate holding caps, the central bank will apply a temporary issuance guardrail that limits the total circulation of any single systemic stablecoin to £40 billion, or about $50.6 billion.

The shift matters because the original proposal had drawn criticism from the crypto industry and from a U.K. House of Lords committee, which warned that strict holding limits could damage stablecoin issuers' business models. Under the revised approach, everyday users and larger companies would not face limits on the amount, frequency or type of stablecoin transactions they make.

The Bank of England also changed its reserve requirements for stablecoin issuers. It lowered the required share of backing assets held as non-interest-bearing central bank deposits to 30%, allowing issuers to place as much as 70% of reserves in short-term U.K. government debt with maturities under six months.

Issuers may earn yield from those government securities, but the central bank is still barring them from paying interest or dividends directly to people simply for holding stablecoins. Activity-based rewards, including cash-back tokens or loyalty points linked to payment transactions through Web3 apps, would be allowed.

The Bank of England said the guardrail is meant to protect the wider U.K. credit system from sudden capital outflows while still leaving room for innovation and competition. The central bank plans to scale back and eventually remove the cap as the market matures, with regulated stablecoins expected to launch in the U.K. in 2027 after final feedback closes in September.