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Bank of England Eases Stablecoin Rules, Removing Holding Limits to Protect UK Fintech Hub
The Bank of England (BoE) announced on 22 June 2026 that it will drop individual and corporate holding limits for pound‑backed stablecoins, replacing them with a temporary issuance cap of £40 billion per stablecoin. The change is part of a broader regulatory framework that also lifts caps on the amount of backing assets that can be held in short‑term UK government debt, raising the permissible share from 60 % to 70 %. The new guidance will be open for public comment until 22 September and is expected to be finalized by the end of 2026.
The original BoE guidance, published in late 2025, had imposed strict limits on stablecoin ownership: individuals could hold no more than £10,000–£20,000 (about US$13,600–$27,200) and businesses were capped at £10 million (about US$13.6 million). The new guidance removes these caps entirely, stating that the temporary £40 billion cap is intended to manage risk by diversifying stablecoin issuance rather than restricting use. "This delivers the same policy outcome, while being cheaper and easier to implement, and allowing unrestricted use by households and businesses," the BoE said.
The BoE also clarified that the guardrail will be reviewed regularly and removed once risks to credit provision have been addressed. The central bank highlighted that stablecoins pose credit risk for consumers and a run risk for banks, and that consumer protections and transparency requirements for issuers regarding reserve assets will remain in place.
"As stablecoins scale, we expect them to be able to deliver significant benefits," the BoE said in a statement. "This includes enhancing choice and flexibility for consumers and businesses. At the same time, our approach will ensure that risks are effectively identified and managed as stablecoins scale, to safeguard monetary and financial stability and preserve trust in money as new forms emerge."
The decision comes amid concerns that the original guidance could undermine the United Kingdom’s position as a global fintech hub. The BoE’s new framework is designed to keep the UK competitive with the United States and the European Union, where the GENIUS Act and the Markets in Crypto‑Assets (MiCA) regulation provide a more prescriptive approach. According to reports, the U.S. and EU have already established comprehensive stablecoin regulatory regimes, and the BoE’s guidance is intended to align the UK with these developments while maintaining a flexible regulatory environment.
"This is a major milestone in delivering greater choice and innovation in U.K. payments. Innovation thrives on trust. And today we've set out the foundations of that trust for a new form of money, with prompt redemption, strong protections and central bank support. This is truly a world‑leading regime," Deputy Governor for Financial Stability Sarah Breeden said in a release.
Industry analysts have noted that the BoE’s approach, which focuses on guardrails rather than prescriptive rules, has historically attracted fintech firms to the UK. Gareth Lodge, principal analyst at Celent, told American Banker that the UK’s principles‑based framework has made it an easier jurisdiction to innovate in, even if it may be slower to reach market.
The BoE’s new guidance also reflects the market reality that U.S. dollar‑backed stablecoins dominate the space, accounting for about 99 % of the world’s stablecoins. By allowing up to 70 % of reserves to be held in short‑term UK government debt, the BoE aims to create a viable sterling‑backed stablecoin ecosystem that can compete with dollar‑denominated digital assets.
The guidance will be subject to a public consultation period that ends on 22 September. The BoE has stated that the final rules are expected by the end of 2026, which would enable regulated stablecoins to operate at scale in 2027. The temporary issuance cap and the increased backing asset flexibility are intended to provide a stable regulatory foundation while the UK monitors the impact on credit provision and systemic risk.
In summary, the Bank of England’s decision to remove individual and corporate holding limits for pound‑backed stablecoins and introduce a temporary £40 billion issuance cap marks a significant shift in the UK’s approach to digital currency regulation. The move is aimed at preserving the country’s fintech leadership, aligning with international frameworks, and ensuring that stablecoins can be used safely and efficiently by consumers and businesses.
The original BoE guidance, published in late 2025, had imposed strict limits on stablecoin ownership: individuals could hold no more than £10,000–£20,000 (about US$13,600–$27,200) and businesses were capped at £10 million (about US$13.6 million). The new guidance removes these caps entirely, stating that the temporary £40 billion cap is intended to manage risk by diversifying stablecoin issuance rather than restricting use. "This delivers the same policy outcome, while being cheaper and easier to implement, and allowing unrestricted use by households and businesses," the BoE said.
The BoE also clarified that the guardrail will be reviewed regularly and removed once risks to credit provision have been addressed. The central bank highlighted that stablecoins pose credit risk for consumers and a run risk for banks, and that consumer protections and transparency requirements for issuers regarding reserve assets will remain in place.
"As stablecoins scale, we expect them to be able to deliver significant benefits," the BoE said in a statement. "This includes enhancing choice and flexibility for consumers and businesses. At the same time, our approach will ensure that risks are effectively identified and managed as stablecoins scale, to safeguard monetary and financial stability and preserve trust in money as new forms emerge."
The decision comes amid concerns that the original guidance could undermine the United Kingdom’s position as a global fintech hub. The BoE’s new framework is designed to keep the UK competitive with the United States and the European Union, where the GENIUS Act and the Markets in Crypto‑Assets (MiCA) regulation provide a more prescriptive approach. According to reports, the U.S. and EU have already established comprehensive stablecoin regulatory regimes, and the BoE’s guidance is intended to align the UK with these developments while maintaining a flexible regulatory environment.
"This is a major milestone in delivering greater choice and innovation in U.K. payments. Innovation thrives on trust. And today we've set out the foundations of that trust for a new form of money, with prompt redemption, strong protections and central bank support. This is truly a world‑leading regime," Deputy Governor for Financial Stability Sarah Breeden said in a release.
Industry analysts have noted that the BoE’s approach, which focuses on guardrails rather than prescriptive rules, has historically attracted fintech firms to the UK. Gareth Lodge, principal analyst at Celent, told American Banker that the UK’s principles‑based framework has made it an easier jurisdiction to innovate in, even if it may be slower to reach market.
The BoE’s new guidance also reflects the market reality that U.S. dollar‑backed stablecoins dominate the space, accounting for about 99 % of the world’s stablecoins. By allowing up to 70 % of reserves to be held in short‑term UK government debt, the BoE aims to create a viable sterling‑backed stablecoin ecosystem that can compete with dollar‑denominated digital assets.
The guidance will be subject to a public consultation period that ends on 22 September. The BoE has stated that the final rules are expected by the end of 2026, which would enable regulated stablecoins to operate at scale in 2027. The temporary issuance cap and the increased backing asset flexibility are intended to provide a stable regulatory foundation while the UK monitors the impact on credit provision and systemic risk.
In summary, the Bank of England’s decision to remove individual and corporate holding limits for pound‑backed stablecoins and introduce a temporary £40 billion issuance cap marks a significant shift in the UK’s approach to digital currency regulation. The move is aimed at preserving the country’s fintech leadership, aligning with international frameworks, and ensuring that stablecoins can be used safely and efficiently by consumers and businesses.
