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Bank of England drops £20k stablecoin holding cap, sets £40bn per-issuer ceiling

BoE policy statement on sterling-denominated systemic stablecoins removes individual holding caps, adds a temporary £40bn cap per issuer, raises gilt share of backing to 70%. Feedback by 22 Sept.

by 5 min read
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The Bank of England published its policy statement and draft Code of Practice for sterling-denominated systemic stablecoins on June 22, 2026. The headline change versus the November 2025 consultation: the per-person £20,000 holding limit and the £10 million business limit that the November paper had floated are gone. They are replaced by a temporary £40 billion cap on total issuance per systemic stablecoin, and the share of backing assets that issuers can hold in short-term UK government debt is lifted from the consulted 60% to 70%. Primary documents are the BoE's news release and the Sterling-denominated systemic stablecoins policy paper. Reuters-feed coverage on the wire ran via CoinDesk policy and Euronews business the same day.

What changed from the November 2025 consultation

Three of the four loudest objections from industry and the House of Lords Financial Services Regulation Committee — surfaced again in the Lords' June 2026 letter — survived into the policy statement as concessions.

  1. Individual and corporate holding limits removed. The November consultation proposed a £10,000–£20,000 cap per individual and £10M per business. The BoE has dropped both. The Bank notes that holding limits remain a "macroprudential tool" it can reach for in the future, but they are not in the day-one regime.
  2. Issuance ceiling replaces holding caps. Each systemic stablecoin is capped at £40 billion total in circulation during the transitional phase. The cap is a brake on the speed of deposit substitution from UK banks into stablecoins, not a permanent ceiling.
  3. Backing-asset composition loosened. Issuers may hold up to 70% of reserves in short-term UK government debt (gilts) versus 60% in the consultation. The remaining at least 30% sits in non-interest-bearing accounts at the Bank, which keeps the on-demand redemption path intact.
  4. Interest payments to coin holders remain banned. Issuers can keep the yield on their gilt book; they cannot pass it on.

Numbers

- Publication date:           2026-06-22
- Paper:                      Sterling-denominated systemic stablecoins (PS)
- Per-issuer issuance cap:    £40,000,000,000 (~$53B at GBP/USD ~1.33)
- Individual holding cap:     none (removed; was £10,000-£20,000 in CP)
- Business holding cap:       none (removed; was £10,000,000 in CP)
- Backing - max in UK gilts:  70% (raised from 60%)
- Backing - min at BoE:       30% non-interest-bearing
- Interest paid to holders:   prohibited
- Consultation feedback by:   2026-09-22
- Code of Practice final:     end of 2026
- Operational from:           2027
- Joint regulator:            Bank of England (systemic) + FCA (non-systemic)
- Sources: Bank of England policy statement; CoinDesk policy; Euronews business

Who this binds and who it does not

The regime covers systemic sterling-denominated stablecoins — payment-grade tokens with enough UK retail and merchant footprint that HM Treasury formally recognises them as systemic. Non-systemic stablecoins — the on-chain trading-pair USDC/USDT cohort used in crypto markets — stay with the Financial Conduct Authority under its separate consultation regime (see the FCA's CP25/14 on stablecoin issuance and custody). The Bank notes the two regulators are aligning the transition path so an issuer that grows past the systemic threshold moves from the FCA's regime into the joint BoE/FCA regime without a regulatory gap.

The £40bn ceiling is, in practice, a forward-looking number. No sterling stablecoin currently in circulation comes close. The cap exists to ensure the first systemic issuer cannot reach a tipping point in deposit substitution before the regime has a feedback loop.

What to watch

  1. Issuer applications. With the rules now visible, the first formal applications for systemic-stablecoin recognition can begin under the joint BoE/FCA notification track. Sterling stablecoin issuers already operating under FCA's non-systemic rules — including the Société Générale-FORGE EUR/GBP franchise and bank-issued sterling tokens floated by UK clearers — are the candidates to declare intent first.
  2. Reserve composition mechanics. The Bank has not yet specified the exact maturity bucket inside "short-term UK government debt" — published guidance on the haircut, the duration ladder and the rebalancing cadence will land between now and the September 22 consultation close.
  3. Cross-border interoperability. A UK sterling stablecoin that wants to settle against the EU's digital euro framework approved by the ECON committee on June 23 — see our coverage of the ECON vote — will need joint conformance with the BoE Code of Practice and the EU's MiCA EMT regime. The Bank has not flagged a bilateral with the ECB on this, yet.
  4. Macroprudential clause. The text reserves the right to reintroduce holding limits "if needed" — a clause UK Finance and the British Retail Consortium had pushed back on. The trigger conditions are not specified.

Context — third G7 stablecoin regime to land in 2026

The UK is the third G7 jurisdiction this year to ship a stablecoin rulebook. The US GENIUS Act was signed in 2025 with implementing regulations expected from the Federal Reserve and OCC by July 2026; the EU's MiCA has been in force since December 30, 2024 and its EMT (electronic money token) regime now covers euro stablecoins issued out of France, Germany and Lithuania. Japan's June 11 FIEA bill — covered in our Japan FIEA post — extends financial-instruments rules to crypto but leaves the existing stablecoin regime under the Payment Services Act alone.

The convergence is on a small set of bright lines: 1:1 backing in HQLA, daily redemption, interest payments to holders banned, central-bank reserves required. The divergences — issuance caps versus holding caps, fiat reserve share, supervisory split between central bank and conduct regulator — are where each jurisdiction shows its hand. The BoE's choice of issuance cap rather than holding cap puts the friction on issuers rather than users, which is closer to the EU MiCA EMT shape than to the early US discussions of holding caps.

Sources:

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