The Bank of England has dropped planned user holding limits for systemic sterling stablecoins and instead proposed a temporary 40 billion pounds (US$53 billion) cap on each coin’s total issuance.

The draft rules, due to take effect by the start of 2027, aim to support the use of the digital tokens while limiting risks to UK bank funding.

The move replaces the central bank’s 2025 consultation, which had proposed per-coin caps of 20,000 pounds (US$26,000) for individuals and 10 million pounds (US$13.2 million) for businesses as a temporary safeguard against deposit flight from banks.

The draft also lets issuers hold 70% of backing assets in short-term UK government debt and 30% in non-interest-bearing Bank of England deposits, up from the 60:40 split proposed last year.

It also requires stablecoins to be redeemable for cash within 24 hours and bans interest payments.

The rules apply to systemic stablecoins, which the Bank of England and the Financial Conduct Authority would jointly regulate.

Non-systemic qualifying stablecoin issuers would fall under the Financial Conduct Authority alone.

The changes come as the sterling stablecoin market remains small, with about $12 million in circulation.

Comparisons with the European Union’s Markets in Crypto-Assets, or MiCA, regime are limited because MiCA requires minimum shares in commercial bank deposits, while the Bank of England requires non-interest-bearing central bank deposits.

🔗 Source: Bloomberg

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