The Bank of England (BoE) published a policy statement and draft rules for systemic stablecoins on Monday, outlining how regulated British pound-backed stablecoins would operate in the United Kingdom.
The BoE defines systemic stablecoins as those that are widely used in payments and may pose risks to the UK’s financial stability. HM Treasury is responsible for determining whether a stablecoin falls within the systemic regime.
Under the policy statement, systemic stablecoin issuers will be allowed to hold up to 70% of reserves in interest-bearing government debt, up from 60% under the previous proposal. Proposed holding limits have also been replaced with a temporary 40-billion-pound ($52.8 billion) issuance cap.
“This guardrail will be reviewed regularly and removed once risks to credit provision have been addressed,” the central bank said in an announcement published on Monday.
The proposal means that the UK is the only country capping issuance of stablecoins in its own currency, said Katie Harries, Coinbase’s head of policy, Europe.
“Two questions remain if the UK is to fully capitalize on the benefits stablecoins can bring: what ‘temporary’ means for the per-coin issuance cap and whether stablecoins can be used for settlement in core wholesale markets, without which the UK’s tokenization ambitions will not be delivered,” she said in a statement shared with Cointelegraph.
Aiming for 2027 rulebook rollout
However, this moves the UK closer to launching a dedicated regulatory framework for stablecoins, with the BoE aiming to finalize its rulebook by the end of 2026 ahead of a planned 2027 rollout.
“The Bank of England has clearly listened on holding limits, moving away from a complex and restrictive approach towards a more proportionate framework. That is a positive step,” said ClearBank CEO Mark Fairless in a statement shared with Cointelegraph. “But further progress is needed to ensure the regime does not constrain sustainable business models, particularly through the backing asset requirements.”
Related: Critics tell UK Lords stablecoins are not future money
Bank shifts approach after industry feedback
The issuance guardrail replaces the holding limits proposed in the BoE’s November 2025 consultation, which would have limited individuals to 20,000 pounds per stablecoin and businesses to 10 million pounds per stablecoin.
Systemic stablecoins entail payments and retail-focused tokens.
Source: Bank of England
At the time, the Bank argued the limits were needed to prevent large-scale shifts of deposits out of the banking system, which could reduce the availability of credit to households and businesses. Respondents to the consultation warned that the restrictions could limit the usability of stablecoins and create operational challenges for issuers.
The Bank said the new approach is intended to achieve the same policy objective while allowing unrestricted use by households and businesses.
“The endgame should be a truly risk-based framework rather than a one-size-fits-all approach, otherwise the UK is in danger of leaving sterling stablecoins at the starting line while other markets move ahead,. ClearBank’s Fairless said.”
The regime will apply only to stablecoins deemed systemic, while non-systemic stablecoins used mainly for crypto trading will remain under the Financial Conduct Authority’s supervision.
In May, BoE Deputy Governor Sarah Breeden said the the central bank was reconsidering its proposed holding limits and reserve requirements following feedback from digital asset companies, which argued that the restrictions could hinder adoption and make UK-issued stablecoins less competitive with US dollar-backed rivals.
