The Bank of England has scrapped its proposed limits on individual stablecoin holdings, replacing them with a £40 billion cap on total issuance while easing reserve rules to support issuer profitability ahead of a planned 2027 rollout.
In a statement published Monday, the U.K. central bank confirmed it will no longer enforce earlier proposals that would have capped holdings at £20,000 for individuals and £10 million for businesses. Instead, it will implement a system-wide “temporary issuance guardrail,” restricting the total supply of any single systemic stablecoin to £40 billion.
The BoE also adjusted its reserve framework, reducing the share of backing assets required to be held in non-yielding central bank deposits to 30%. This change allows issuers to allocate up to 70% of reserves into short-term U.K. government debt, such as Treasury bills with maturities under six months, creating room to generate returns.
Despite this flexibility, issuers remain barred from distributing interest or dividends directly to users for simply holding stablecoins. However, the bank will permit activity-linked incentives, including cashback rewards or loyalty points tied to payments conducted via Web3 platforms.
The policy shift follows industry and political feedback warning that the original restrictions could undermine business viability and weaken the U.K.’s competitive position in digital asset markets. The BoE acknowledged these concerns and said it had recalibrated its approach accordingly.
The move also comes after a parliamentary committee cautioned that the initial limits risked significantly constraining stablecoin issuers.
The reversal is widely viewed as a positive development for the crypto sector, which had argued that the earlier framework was overly restrictive and likely to stifle innovation.
Under the updated rules, users and businesses will face no limits on stablecoin holdings or transaction activity. The BoE said the issuance cap is intended to mitigate systemic risks, such as sudden capital outflows, while still enabling market growth and innovation.
The central bank added that it may gradually relax and eventually remove the cap as the market matures. Following a final consultation period set to conclude in September, the framework is expected to clear the path for regulated stablecoins to launch in the U.K. in 2027, alongside broader crypto regulation.
