Bank of England Eases Stablecoin Limits, Caps Issuance at $50B

The U.K.’s central bank has scrapped proposed retail holding caps in favor of a £40 billion aggregate issuance limit, while also offering more favorable yield conditions for stablecoin issuers ahead of a planned 2027 rollout.

The Bank of England has formally withdrawn its contentious plan to restrict how much stablecoin individuals and businesses could hold, responding to pressure from lawmakers and industry participants.

In a statement released Monday, the central bank confirmed it will no longer pursue the previously proposed £20,000 cap for individuals and £10 million cap for corporations. Instead, it will introduce a system-wide “temporary issuance guardrail,” limiting the total supply of any single systemic stablecoin to £40 billion.

Additionally, the BoE has reduced the share of reserves that must be held in non-interest-bearing central bank deposits to 30%. This change allows issuers to allocate up to 70% of their backing assets into short-term U.K. government debt, such as Treasury bills with maturities under six months, enabling them to earn yield.

While issuers can benefit from returns on these assets, they are prohibited from passing interest or dividends directly to users simply for holding stablecoins. However, the bank will allow incentive-based rewards tied to usage, such as cashback or loyalty programs linked to transactions through Web3 applications.

The BoE acknowledged that feedback from its recent consultation highlighted concerns that earlier restrictions could undermine business viability and reduce the U.K.’s competitiveness globally. It said those concerns prompted a reassessment of its approach.

This policy shift also follows a recent report from a parliamentary committee, which warned that the original limits could significantly hinder stablecoin issuers’ operations.

The reversal is seen as a win for the crypto sector, which had criticized the initial proposals as overly restrictive and harmful to innovation.

Under the updated framework, both consumers and businesses will be free from limits on how much stablecoin they can hold or transact. The BoE emphasized that the new issuance cap is designed to safeguard the broader financial system from risks like sudden capital outflows, while still supporting growth and innovation.

The central bank added that it may gradually relax and eventually remove the issuance cap as the market matures. Following a final consultation phase set to conclude in September, the new regime is expected to pave the way for regulated stablecoins to launch in the U.K. by 2027, alongside the country’s broader crypto regulatory framework.