Bank of England backs down from 'overly conservative' regime for stablecoin issuers

The BoE published its policy statement and draft Code of Practice for systemic stablecoin issuers on June 22. In the new policy, the BoE replaced the proposed individual holding caps with a £40 billion per-coin issuance guardrail and raised the permitted share of interest-bearing backing assets from 60% to 70%.

The November 2025 consultation proposed capping individual sterling stablecoin ownership at £20,000 per person and £10 million per business. The BoE has now scrapped both provisions and, in their place, will apply a temporary “issuance guardrail” set at £40 billion per stablecoin. 

BoE revises stablecoin policy for improved issuer economics

The new policy will limit how much a single issuer can put into circulation rather than policing every individual wallet. This change makes regulation straightforward, compared to the constant cross-platform monitoring infrastructure required to monitor individual wallet addresses. 

Earlier in May, Simon Jennings, the executive director of the UK Cryptoasset Business Council, criticized the need to monitor individual wallet addresses. He termed it a “costly, complex new system.”

Under the new policy, the BoE has also permitted a share of interest-bearing holdings, specifically short-term UK government debt. The regulator has raised the backing asset ratio from 60% to 70%, while the remaining 30% must be held as central bank deposits. 

The BoE argues that these measures ensure issuers can meet redemption under stress, eventually protecting end users. The regulator pointed out that the revised 30:70 structure meaningfully improves issuer economics, narrowing the profitability gap with US issuers operating under the GENIUS Act and European issuers covered by MiCA.

Coinbase’s Head of Policy for Europe, welcomed the framework but flagged two unresolved gaps in a statement to Cryptopolitan following publication: “what ‘temporary’ means for the per-coin issuance cap — the UK is the only country capping issuance of stablecoins in its own currency — and whether stablecoins can be used for settlement in core wholesale markets, without which the UK’s tokenisation ambitions will not be delivered.” 

The BoE’s deadline for feedback is September 22, 2026, with final rules expected by year-end. The regulator targets a live regime for regulated stablecoins by 2027.

BoE moves away from an overly conservative stance

In May, Deputy Governor Sarah Breeden admitted that the original proposals may have been “overly conservative.” Breeden also pointed out that the holding-limit model was being abandoned entirely, framing the move as delivering “the same policy outcome, while being cheaper and easier to implement.”

Earlier this year, Coinbase CEO Brian Armstrong argued that UK stablecoin rules “are at risk of preventing the UK from being globally competitive in the digital economy,” directly citing the holding caps.

In early June, the UK Parliament’s own Financial Services Regulation Committee published a cross-party House of Lords report telling the BoE to scrap the holding caps and reconsider the 40% unremunerated reserve floor.

The committee’s argument was that pre-emptive limits on a market that barely exists yet don’t make sense. To put this into perspective, sterling stablecoins account for less than 0.5% of a $315 billion global market, according to CoinGecko data. 

At the moment, four companies, Revolut, Monee Financial Technologies, ReStabilise, and VVTX, are already testing stablecoin products in the FCA’s regulatory sandbox. The stablecoin firms intend to develop stablecoins for retail payments, wholesale settlement, and crypto trading.

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