BoE drops per-coin holding limits for a £40bn issuance cap and raises the gilt backing share to 70%, but industry says sterling still trails its rivals
The Bank of England (BoE) has published its policy statement and draft Code of Practice for systemic stablecoin issuers, abandoning the per-coin holding limits it consulted on last year in favour of a single issuance cap.
Under the November 2025 proposals, individuals would have been held to £20,000 ($26,400) per coin and businesses to £10m. The BoE has dropped both after industry and the House of Lords warned they were costly and complex to build for a measure meant to be temporary.
In their place, each systemic stablecoin will face an initial issuance ceiling of £40bn, reviewed regularly and removed once risks to bank credit provision have eased. Households and businesses face no limits on the size, frequency or type of transaction.
The Bank also eased its backing-asset rules, as issuers can now hold up to 70% of reserves in short-term UK government debt of up to six months’ maturity, up from 60%, with the remaining 30% in unremunerated deposits at the BoE.
With central bank deposit requirements down from 40%, issuers can gain immediate liquidity for redemptions. The BoE confirmed it will not pay interest on those deposits, on the grounds stablecoins are payment instruments rather than a store of value.
Other positions hold from the consultation, including redemption within 24 hours of a full request, direct access to payment systems, a ban on interest to coinholders alongside permitted activity-based rewards, and a Central Bank Liquidity Facility letting solvent issuers monetise gilts in stress.
Sarah Breeden, Deputy Governor for Financial Stability, called the package “a major milestone” and “truly a world leading regime.”
It comes on the back of a shared long-term vision from the BoE and Financial Conduct Authority (FCA) for tokenisation in UK wholesale markets.
How the UK compares with the US and EU
The regime lands between Washington’s GENIUS Act and Brussels’ MiCA, and is more restrictive than both on the points that drive commercial viability. GENIUS requires 100% reserves but lets US issuers hold them in Treasury bills, repos and money market funds, with no mandated central bank deposit and no issuance cap, so issuers can earn yield across effectively all their backing.
On the other hand, MiCA forces euro stablecoins to hold 30% to 60% in bank deposits and caps non-euro coins at €200m ($229m) in daily transactions, but places no transaction cap on euro coins themselves.
The UK is the only one of the three to require a fixed slice of unremunerated central bank deposits and to cap issuance of a stablecoin denominated in its own currency. Sterling issuers earn nothing on 30% of reserves and face a ceiling dollar and euro issuers do not.
Industry wants more
Mark Fairless, CEO of ClearBank, tells Payment Expert: “This is a welcome move and the direction of travel is encouraging, but there is still more to be done. The UK cannot win the global race on digital assets if sterling stablecoins remain less commercially viable or less useful than their dollar and euro counterparts.
“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. But further progress is needed to ensure the regime does not constrain sustainable business models, particularly through the backing asset requirements.”
Fairless added that issuing stablecoins in a commercially viable way remains “near impossible” for banks, leaving the UK “playing catch up with its global counterparts.”
Su Carpenter, Executive Director at CryptoUK, tells Payment Expert changes to backing assets and holding limits showed the Bank had “assessed the issues and concerns that had been raised”.
She adds: “We also need to ensure that all of the current consultations and calls for input that are currently in progress are factored into the overall approach the Bank and other UK regulators take when finalising all of the elements of the wider regime for stablecoins and digital assets.
“There are still a lot of moving parts, and collaboration across all organisations working on the bigger picture for the UK is critical.”
Janine Hirt, CEO of Innovate Finance, went further, warning the Bank “still risks creating the most conservative and cautious stablecoin regime in the world,” more cautious “than not only the US, Singapore and UAE but also the EU and Canada.”
She singled out the deposit rule: “The requirement for 30% of backing assets to be held at the Bank of England with no remuneration removes a third of the potential revenue for service providers and issuers… The UK will be the only country in the world that requires a significant proportion of assets to be held in deposits that earn no return.”
Hirt added that the regime risks “dollarisation of the economy” and “a missed opportunity to improve Britain’s productivity record.”
On the other hand, Nick Jones, Founder and CEO of Zumo, welcomed the changes, saying the climbdown would encourage “the serious stablecoin players, such as Tether and Circle, to engage more meaningfully with the UK market, having understandably previously been put off by the initial draft rules.”
Next steps
The consultation closes on 22 September 2026. The Bank intends to finalise the Code of Practice by the end of 2026, with a joint publication alongside the FCA on the transition from non-systemic to systemic regulation due shortly.
Regulated stablecoins are expected to operate in the UK from 2027.
