Bank Of England Drops Stablecoin Holding Caps For A £40 Billion Issuer Guardrail
The Bank of England draft systemic stablecoin rules replace temporary holding limits with an initial £40 billion issuance guardrail and raise the short-term government debt backing share to 70%.
Bank Of England Rewrites Stablecoin Guardrails
The Bank of England has published a policy statement and draft rules for systemic stablecoin issuers, replacing planned temporary holding limits with an issuance guardrail for each systemic stablecoin.
The initial guardrail is set at £40 billion, while the framework keeps household and business use unrestricted.
The change matters for payment firms because it shifts the near-term constraint from user ownership caps to issuer scale.
The Bank said the approach should protect credit provision while being cheaper and easier to implement than temporary holding limits.
It also leaves stablecoin users with fewer operational limits at the point of payment.
Backing Assets Get More Room
The Bank also changed the proposed backing-asset mix after consultation.
Systemic stablecoin issuers may hold up to 70% of backing assets in interest-bearing short-term UK government debt, up from 60%, with the remainder held in central bank deposits.
That balance is designed to give issuers a more workable business model while preserving prompt redemption capacity.
The central bank deposits are intended to help issuers meet withdrawals quickly, while the higher government-debt share gives firms more room to earn income on backing assets.
FCA Coordination Shapes The Transition
The Bank and the Financial Conduct Authority are building the UK regime together, including a managed transition as firms move from non-systemic to systemic status.
Further detail is expected alongside the FCA's final rules.
Deputy Governor for Financial Stability Sarah Breeden described the rules as a milestone for payment innovation and said trust depends on prompt redemption, strong protections and central bank support.
The statement keeps stablecoins within the wider UK payments agenda, but it also makes clear that systemic issuers will face a resilience framework rather than a light-touch product regime.
Final Rules Depend On Consultation
Feedback is due by 22 September 2026.
If the consultation proceeds as planned, the Code of Practice is scheduled for completion by the end of 2026, with supporting materials to accompany the final rules.
For fintechs, banks and payment firms, the operating issue is now whether the £40 billion guardrail and the 70% backing-asset allowance give systemic stablecoin issuers enough scale to build payment products while regulators monitor credit, redemption and confidence risks.
