Bank of England sets £40B stablecoin cap, eases reserve rules
6.7 Stablecoins The Bank of England removed stablecoin holding caps, set a £40B issuance limit per coin, and relaxed reserve rules to foster innovation and regulatory clarity for UK stablecoin issuers.
The Bank of England has released its final policy statement and draft Code of Practice for systemic stablecoin issuers, signaling a major shift in the UK’s regulatory landscape. The updated framework eliminates previously proposed individual and corporate holding caps, introducing instead a system-wide issuance cap of £40 billion per stablecoin. Reserve asset requirements have also been eased. Issuers can now hold up to 70% of their reserves in short-term UK government debt, with the remainder in central bank deposits. These adjustments, made after industry consultation, are designed to provide clearer regulatory guidelines and encourage innovation in the stablecoin sector. The Bank of England and the Financial Conduct Authority are working together on a comprehensive regulatory regime, including transition arrangements for growing firms. The new rules are expected to enable stablecoin operations from 2027, though the rollout may be delayed by the transition process. This regulatory clarity is intended to strengthen the UK’s position in the global crypto market.
