The Bank of England has replaced its provisional limits on sterling stablecoin holdings by individuals and businesses with a single £40 billion cap per stablecoin. The initial plans limited individuals to £20,000 and businesses to £10 million in stablecoin holdings. These limits have now been scrapped, consolidating the restriction into an overall issuance cap of £40 billion per stablecoin [1, 2, 3].
The £40 billion cap is temporary and will be regularly reviewed. The Bank aims to remove the cap once risks to credit supply from stablecoins recede [3]. This move reflects the Bank’s effort to manage potential risks stablecoins pose to the banking sector while supporting digital currency development [1].
Stablecoins are tokens pegged to fiat currencies designed to enable faster and cheaper payments, especially cross-border transactions [1]. To further strengthen the regulatory framework, the Bank changed the backing asset requirements for stablecoins. Previously, stablecoins had to hold 60% in short-term gilts and 40% in unremunerated central bank reserves. This ratio has been adjusted to 70% gilts and 30% reserves [1, 3].
The Bank released a draft code of practice for systemic stablecoins on June 22, 2026. The draft includes the issuance cap and adjusted backing asset rules. Public consultation on the draft will run until September 22, 2026 [1, 3].
Following the consultation, the Bank plans to finalize the regulatory framework by the end of 2026 [3]. Stablecoins that meet the new requirements will be able to operate legally in the UK starting in 2027 [3].
