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Bank of England Removes Wallet Caps, Sets 40 B Issuance Cap for Sterling Stablecoins
On 22 June 2026, the Bank of England (BoE) announced that it would scrap the proposed individual and business holding limits for sterling‑denominated stablecoins, replacing them with a temporary £40 billion issuance guardrail for each systemic product.
Under the new policy statement, the BoE eliminates the previously considered caps of £20 000 per person and £10 million per business. Instead, each systemic stablecoin that falls under the BoE’s regime will be capped at a total supply of £40 billion until the central bank reviews the measure.
The BoE also increased the proportion of backing assets that may be held in interest‑bearing short‑term UK government debt from 60 % to 70 %, while the remaining 30 % must be held in central‑bank deposits. This shift is intended to improve issuer economics by allowing a larger share of the backing pool to earn interest, thereby reducing reliance on transaction fees or other revenue streams. The 30 % deposit requirement remains to preserve a core layer of financial stability.
The £40 billion cap translates to roughly $53 billion at current exchange rates. For context, the two largest dollar‑backed stablecoins, USDT and USDC, have market capitalisations of about $186 billion and $74 billion, respectively. The cap therefore keeps a single sterling stablecoin well below the scale of the top dollar tokens, but it removes the technical and privacy challenges of policing wallet‑level limits.
Removing wallet caps is expected to make sterling stablecoins more usable for everyday payments. Without individual limits, merchants, large businesses, and consumers can hold and transact with the token without needing to monitor or split balances across multiple accounts. The BoE’s framework still imposes a product‑level ceiling, which the Bank says is a temporary measure to mitigate risks to credit provision.
The BoE acknowledges that a supply cap could create scarcity if demand exceeds the £40 billion limit, potentially leading to secondary‑market prices above par. The central bank characterises this risk as manageable and notes that it would likely only arise if a systemic stablecoin attracted sustained, large‑scale demand.
The BoE’s policy statement is part of a broader regulatory timeline. The Financial Conduct Authority (FCA) has launched a stablecoin sandbox cohort that includes firms such as Monee, ReStabilise, Revolut, and VVTX. Testing is scheduled to begin in the first quarter of 2026, with the FCA’s finalised rules expected by the end of 2026. The BoE’s 2027 operational path gives issuers and infrastructure providers a year to prepare for a regulated launch.
In summary, the BoE has removed the most restrictive usability hurdle for sterling stablecoins by scrapping wallet caps, but it has retained a product‑level issuance ceiling of £40 billion. The new reserve split favours higher interest‑bearing assets, and the framework is designed to be reviewed and potentially relaxed once the Bank is satisfied that the stablecoin market will not undermine deposit‑driven credit. The forthcoming FCA sandbox tests and the 2027 launch date will determine whether the capped supply is sufficient for domestic payment use or whether the ceiling will become a limiting factor for a successful issuer.
Under the new policy statement, the BoE eliminates the previously considered caps of £20 000 per person and £10 million per business. Instead, each systemic stablecoin that falls under the BoE’s regime will be capped at a total supply of £40 billion until the central bank reviews the measure.
The BoE also increased the proportion of backing assets that may be held in interest‑bearing short‑term UK government debt from 60 % to 70 %, while the remaining 30 % must be held in central‑bank deposits. This shift is intended to improve issuer economics by allowing a larger share of the backing pool to earn interest, thereby reducing reliance on transaction fees or other revenue streams. The 30 % deposit requirement remains to preserve a core layer of financial stability.
The £40 billion cap translates to roughly $53 billion at current exchange rates. For context, the two largest dollar‑backed stablecoins, USDT and USDC, have market capitalisations of about $186 billion and $74 billion, respectively. The cap therefore keeps a single sterling stablecoin well below the scale of the top dollar tokens, but it removes the technical and privacy challenges of policing wallet‑level limits.
Removing wallet caps is expected to make sterling stablecoins more usable for everyday payments. Without individual limits, merchants, large businesses, and consumers can hold and transact with the token without needing to monitor or split balances across multiple accounts. The BoE’s framework still imposes a product‑level ceiling, which the Bank says is a temporary measure to mitigate risks to credit provision.
The BoE acknowledges that a supply cap could create scarcity if demand exceeds the £40 billion limit, potentially leading to secondary‑market prices above par. The central bank characterises this risk as manageable and notes that it would likely only arise if a systemic stablecoin attracted sustained, large‑scale demand.
The BoE’s policy statement is part of a broader regulatory timeline. The Financial Conduct Authority (FCA) has launched a stablecoin sandbox cohort that includes firms such as Monee, ReStabilise, Revolut, and VVTX. Testing is scheduled to begin in the first quarter of 2026, with the FCA’s finalised rules expected by the end of 2026. The BoE’s 2027 operational path gives issuers and infrastructure providers a year to prepare for a regulated launch.
In summary, the BoE has removed the most restrictive usability hurdle for sterling stablecoins by scrapping wallet caps, but it has retained a product‑level issuance ceiling of £40 billion. The new reserve split favours higher interest‑bearing assets, and the framework is designed to be reviewed and potentially relaxed once the Bank is satisfied that the stablecoin market will not undermine deposit‑driven credit. The forthcoming FCA sandbox tests and the 2027 launch date will determine whether the capped supply is sufficient for domestic payment use or whether the ceiling will become a limiting factor for a successful issuer.
