Individuals Dodge Wallet Cap, For Now
The Bank of England has abandoned its earlier plan to restrict the amount of stablecoins that individuals and businesses could hold. The original draft, released earlier this year, would have limited holdings to £20,000 per person and £10 million for corporations. After facing criticism from industry participants and stakeholders, the central bank reversed course and removed these personal and corporate caps entirely.
Instead of limiting wallet sizes, the focus has shifted to managing overall market risk through a different mechanism: capping total issuance per stablecoin.
£40B Ceiling Replaces Personal Limits
In place of the now-abandoned holding restrictions, the Bank of England has introduced a temporary guardrail: no single “systemic” stablecoin may issue more than £40 billion (about $50 billion) in tokens. This issuance cap is designed to prevent any one stablecoin from rapidly becoming too large and potentially threatening financial stability in the UK. The measure is described as temporary, with the possibility it could be raised or removed after further review once the market matures.
The previous proposal would have capped individual holdings at £20,000 and corporate holdings at £10 million per stablecoin.
On paper, this approach offers freedom for users—but it imposes a hard ceiling on issuers.
Systemic stablecoins—defined by their widespread use in payments and their potential impact on UK financial stability—will be subject to this limit. The process for designating a coin as “systemic” rests with HM Treasury, not the Bank itself. According to coindesk.com, this makes the UK the only country currently capping sterling-denominated stablecoin issuance at a national level.
See Also
T-Bills Get Bigger Slice of Reserves
The new policy also relaxes requirements on how stablecoin issuers must back their tokens. Previously, issuers were expected to keep 40% of reserves in non-interest-bearing central bank deposits—a costly move for most firms. Under the revised rules, only 30% must be held this way, while up to 70% can now be parked in short-term UK government debt (gilts or T-bills) with maturities under six months. This marks an increase from the previous 60% threshold for gilts.
This adjustment is significant for stablecoin operators since short-term government debt typically yields interest income, helping offset operational costs. However, issuers are still prohibited from passing any interest or dividends directly to end-users holding the stablecoin itself.
No Interest, Yes to Cashback Rewards
Despite barring direct interest payments to users, the Bank’s framework leaves room for activity-based incentives such as cashback tokens or loyalty points. These rewards are permitted as long as they do not function as disguised interest on simple holdings.
For users and businesses alike, there are no longer any restrictions on transaction size or frequency when using regulated sterling stablecoins. This means both retail consumers and corporate treasurers can transact freely within the ecosystem—at least until the £40 billion issuance cap is reached by a given issuer.
The policy statement was published on June 22, with feedback open until late 2026. The Bank aims to finalize its rulebook by year-end 2026 and expects regulated sterling stablecoins to go live in 2027 when broader crypto regulations take effect across the UK.
The Main Points
- •The Bank of England scrapped the proposed £20,000 individual and £10 million corporate stablecoin holding limits.
- •A temporary £40 billion ($50 billion) issuance cap now applies to any single systemic stablecoin in the UK.
- •Stablecoin issuers may hold up to 70% of reserves in short-term UK government debt under the new rules.
What remains under scrutiny
If the Bank of England finalizes its stablecoin rulebook by the end of 2026 as planned, regulated stablecoins could launch in the UK from 2027; however, whether the temporary £40 billion issuance cap will be removed or increased after further review remains unclear.
