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Bank of England Unveils Draft Rules for Sterling Stablecoins, Removing Holding Caps and Setting 40bn Issuance Guardrail
On 22 June 2026 the Bank of England (BoE) published a policy statement and draft Code of Practice that will govern systemic sterling‑denominated stablecoin issuers in the United Kingdom. The framework removes the previously proposed individual holding limits, introduces a temporary £40 billion issuance guardrail per stablecoin, and raises the proportion of backing assets that can be held in short‑term UK government debt from 60 % to 70 %. The BoE says regulated stablecoins could operate in the UK from 2027, pending feedback by 22 September 2026 and a finalised Code of Practice by year‑end.
The policy statement represents a significant shift from the BoE’s 2025 consultation. Three changes stand out. First, the BoE scrapped the temporary cap that would have limited how much stablecoin any individual or business could hold. The cap was criticised by industry and Parliament for making UK‑issued stablecoins less attractive than dollar or euro alternatives. In its place the BoE has introduced a temporary issuance guardrail that caps each systemic stablecoin at £40 billion in total circulation. The BoE says the guardrail delivers the same policy outcome of protecting credit provision while being cheaper and simpler to implement.
Second, the BoE increased the maximum share of backing assets that issuers may hold in short‑term UK government debt from 60 % to 70 %. The remaining 30 % must be held in non‑interest‑bearing deposits at the BoE. The change is intended to support more viable business models while still ensuring issuers can meet redemption demands promptly.
Third, the BoE and the Financial Conduct Authority (FCA) confirmed they are working together on an end‑to‑end regime, including a managed transition pathway for firms that grow from non‑systemic to systemic status. Further detail is expected alongside the FCA’s final rules.
Parliament welcomed the decision. Lord Vaizey of Didcot and Gurinder Singh Josan CBE MP, co‑chairs of the Crypto and Digital Assets All‑Party Parliamentary Group, issued a joint statement describing the BoE’s move as “a significant and positive step forward for the UK’s digital assets sector.” They said the BoE was listening to industry and Parliament and had adapted its approach to avoid putting the UK at a competitive disadvantage.
Payments firms largely expressed cautious optimism. Kristaps Zips, UK CEO of payabl, called the announcement a “meaningful step forward for the UK payments sector.” He said replacing per‑wallet caps with an issuer‑level issuance limit gives businesses room to build with confidence and signals that the BoE wants stablecoins to play a real role in the economy.
Sam Coyne, Europe CEO of Currenxie, highlighted the potential benefits for small and medium‑sized enterprises. He noted that many businesses face high foreign‑exchange fees and slow transaction times on cross‑border payments, and that stablecoins could offer a cost‑effective alternative.
Justin Jacobs, Chief Policy and Engagement Officer at Pay.UK, welcomed the direction but cautioned that the true test will be how well stablecoins integrate with the existing ecosystem. He warned against the creation of parallel systems that could fragment the payments landscape and stressed that robust fraud prevention and consumer dispute resolution rules must be built into digital money from day one.
Critics argue the BoE’s approach is still too conservative. Innovate Finance CEO Janine Hirt said the 30 % central‑bank deposit requirement removes a third of potential revenue for service providers and forces UK firms to develop different business models than their global peers. She added that the £40 billion issuance guardrail could hold back tokenisation of wholesale capital markets and create instability if demand exceeds supply.
Mark Fairless, CEO of ClearBank, echoed concerns about commercial viability. He said the BoE had listened on holding limits but pressed for further changes to the backing‑asset requirements and warned that it is near impossible for banks to issue stablecoins in a commercially viable way.
Nigel Brook‑Walters, Chief Revenue Officer at CoinPayments, called the shift on holding limits a “significant climb‑down” and argued that a self‑imposed cap creates a perception of nervousness. He noted that the UK is the only jurisdiction proposing to limit issuance of stablecoins in its own currency and cautioned that unless the temporary nature of the cap is clarified, international issuers may default to dollar stablecoins.
Broader industry voices added context. Parfin CEO Marcos Viriato said the announcement provides a roadmap for how digital money fits into the financial system but that the bigger opportunity lies beyond issuing stablecoins, in interoperability and settlement.
ChilliMint co‑founder Andrew Jones said stablecoins are becoming more of a trust story than a technology story, pointing out that the public still does not know where reserves are held or who is responsible if something goes wrong.
Lydian CEO Carl Grimstad described the BoE’s move as a “real admission that the old closed‑loop financial model is dead” and argued that loosening limits acknowledges that assets like USDT are the plumbing for global liquidity.
CoinCover CCO Anthony Yeung welcomed the issuance guardrail but warned that financial stability is only one part of the trust equation. He said lost credentials, compromised wallets and failures in key management remain persistent risks that can undermine confidence.
Across the responses, consensus emerged on the removal of individual holding limits and the need for a viable stablecoin market. Disagreement remains over the 30 % non‑remunerated deposit requirement, the £40 billion issuance cap, and whether the framework will attract global issuers or push them toward dollar‑denominated alternatives.
The BoE’s draft rules are open for public comment until 22 September 2026. The final Code of Practice is expected by year‑end, and regulated stablecoins could begin operating in the UK from 2027. The next steps will involve the FCA’s final rules, a review of the issuance guardrail, and the market’s response to the new reserve‑composition requirements.
The policy statement represents a significant shift from the BoE’s 2025 consultation. Three changes stand out. First, the BoE scrapped the temporary cap that would have limited how much stablecoin any individual or business could hold. The cap was criticised by industry and Parliament for making UK‑issued stablecoins less attractive than dollar or euro alternatives. In its place the BoE has introduced a temporary issuance guardrail that caps each systemic stablecoin at £40 billion in total circulation. The BoE says the guardrail delivers the same policy outcome of protecting credit provision while being cheaper and simpler to implement.
Second, the BoE increased the maximum share of backing assets that issuers may hold in short‑term UK government debt from 60 % to 70 %. The remaining 30 % must be held in non‑interest‑bearing deposits at the BoE. The change is intended to support more viable business models while still ensuring issuers can meet redemption demands promptly.
Third, the BoE and the Financial Conduct Authority (FCA) confirmed they are working together on an end‑to‑end regime, including a managed transition pathway for firms that grow from non‑systemic to systemic status. Further detail is expected alongside the FCA’s final rules.
Parliament welcomed the decision. Lord Vaizey of Didcot and Gurinder Singh Josan CBE MP, co‑chairs of the Crypto and Digital Assets All‑Party Parliamentary Group, issued a joint statement describing the BoE’s move as “a significant and positive step forward for the UK’s digital assets sector.” They said the BoE was listening to industry and Parliament and had adapted its approach to avoid putting the UK at a competitive disadvantage.
Payments firms largely expressed cautious optimism. Kristaps Zips, UK CEO of payabl, called the announcement a “meaningful step forward for the UK payments sector.” He said replacing per‑wallet caps with an issuer‑level issuance limit gives businesses room to build with confidence and signals that the BoE wants stablecoins to play a real role in the economy.
Sam Coyne, Europe CEO of Currenxie, highlighted the potential benefits for small and medium‑sized enterprises. He noted that many businesses face high foreign‑exchange fees and slow transaction times on cross‑border payments, and that stablecoins could offer a cost‑effective alternative.
Justin Jacobs, Chief Policy and Engagement Officer at Pay.UK, welcomed the direction but cautioned that the true test will be how well stablecoins integrate with the existing ecosystem. He warned against the creation of parallel systems that could fragment the payments landscape and stressed that robust fraud prevention and consumer dispute resolution rules must be built into digital money from day one.
Critics argue the BoE’s approach is still too conservative. Innovate Finance CEO Janine Hirt said the 30 % central‑bank deposit requirement removes a third of potential revenue for service providers and forces UK firms to develop different business models than their global peers. She added that the £40 billion issuance guardrail could hold back tokenisation of wholesale capital markets and create instability if demand exceeds supply.
Mark Fairless, CEO of ClearBank, echoed concerns about commercial viability. He said the BoE had listened on holding limits but pressed for further changes to the backing‑asset requirements and warned that it is near impossible for banks to issue stablecoins in a commercially viable way.
Nigel Brook‑Walters, Chief Revenue Officer at CoinPayments, called the shift on holding limits a “significant climb‑down” and argued that a self‑imposed cap creates a perception of nervousness. He noted that the UK is the only jurisdiction proposing to limit issuance of stablecoins in its own currency and cautioned that unless the temporary nature of the cap is clarified, international issuers may default to dollar stablecoins.
Broader industry voices added context. Parfin CEO Marcos Viriato said the announcement provides a roadmap for how digital money fits into the financial system but that the bigger opportunity lies beyond issuing stablecoins, in interoperability and settlement.
ChilliMint co‑founder Andrew Jones said stablecoins are becoming more of a trust story than a technology story, pointing out that the public still does not know where reserves are held or who is responsible if something goes wrong.
Lydian CEO Carl Grimstad described the BoE’s move as a “real admission that the old closed‑loop financial model is dead” and argued that loosening limits acknowledges that assets like USDT are the plumbing for global liquidity.
CoinCover CCO Anthony Yeung welcomed the issuance guardrail but warned that financial stability is only one part of the trust equation. He said lost credentials, compromised wallets and failures in key management remain persistent risks that can undermine confidence.
Across the responses, consensus emerged on the removal of individual holding limits and the need for a viable stablecoin market. Disagreement remains over the 30 % non‑remunerated deposit requirement, the £40 billion issuance cap, and whether the framework will attract global issuers or push them toward dollar‑denominated alternatives.
The BoE’s draft rules are open for public comment until 22 September 2026. The final Code of Practice is expected by year‑end, and regulated stablecoins could begin operating in the UK from 2027. The next steps will involve the FCA’s final rules, a review of the issuance guardrail, and the market’s response to the new reserve‑composition requirements.
