The Bank of England on Monday revised its proposed stablecoin rules, removing planned limits on individual holdings and easing restrictions on how issuers manage reserves, in a shift aimed at balancing innovation with financial stability.
Under the updated framework, sterling-backed stablecoin issuers will no longer face caps on how much any single user can hold. Instead, the central bank will impose a £40 billion limit on total issuance per issuer, equivalent to about $52.8 billion.
Officials stated the adjustments reflect extensive pushback and feedback from industry participants, who warned that overly rigid constraints would stifle the development of digital payment systems just as tokenized finance gains global momentum.
Balance between innovation and safety
The Bank relaxed reserve requirements, allowing issuers to hold up to 70% of backing assets in short-term government debt, up from a previously proposed 60%. The remainder must be kept in non-interest-bearing deposits at the central bank.
Deputy Governor Sarah Breeden welcomed the finalized framework, describing it as a step toward expanding innovation in UK payments. “This is a major milestone in delivering greater choice and innovation in UK payments.”
She added that trust would be central to the rollout of regulated stablecoins under the new rules. “Innovation thrives on trust. And today we’ve set out the foundations of that trust for a new form of money – with prompt redemption, strong protections and central bank support.”
The Bank of England had previously explored a temporary £20,000 cap on individual holdings, but later revised the proposal after pushback from industry participants who argued it could slow adoption. The central bank said the final framework reflects feedback received during the consultation process.
Britain pushes ahead with digital finance
Breeden has previously warned that without modernized policy changes, substantial financial activity could shift outside of regulatory oversight.
To prevent this, the Bank of England and the Financial Conduct Authority (FCA) are actively running consultations on tokenized markets and broader digital asset frameworks. Market participants have until July 3 to submit feedback. Following the deadline, UK regulators plan to hold industry workshops and publish a comprehensive roadmap for digital markets later this year, with an emphasis on tokenized collateral and wholesale settlement systems.
The digital asset industry has greeted the update with a mix of praise and structural caution. Commenting on the framework, Coinbase’s Head of Policy, Europe, Katie Harries, said, “The Bank of England’s final rules deliver among the strongest stablecoin regimes in the world. Workable reserve composition and proportionate capital requirements, access to central bank deposits and a liquidity backstop, the ability for issuers and exchanges to pay rewards, and deference to home-state regulation for foreign-issued stablecoins, together they add up to a regime that delivers commercial viability, financial stability and the singleness of money.” She added, “Two questions remain if the UK is to fully capitalise on the benefits stablecoins can bring: 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 UK’s pivot underscores an increasing competition among major financial hubs to define the rules of Web3 finance. Globally, governments are accelerating their frameworks: in South Korea, Toss Bank recently partnered with the Solana Foundation to explore blockchain-based payment routing, while banking groups in the United States continue aggressive lobbying efforts around the proposed CLARITY Act to secure legal clarity for digital assets.
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