BOE Scraps £20k Stablecoin Cap for £40 Billion Systemic Guardrail

Bank of England just killed its proposed £20,000 individual stablecoin holding limit, a policy that would have throttled retail adoption before it started. Instead of micro-managing how much a single person can hold, the BOE now caps the total circulation of any single systemic stablecoin at £40 billion ($50.6 billion). That's a macro guardrail, not a per-user ceiling.

From Micro Caps to Macro Guardrails

The original proposal from the BOE would have capped individual holdings at £20,000 ($27,000) and corporate holdings at £10 million. Industry called it overly conservative. A House of Lords committee agreed, warning it could wreck business viability. The BOE listened. The new framework imposes no limits on the amount, frequency, or type of stablecoin transactions an individual or business can make. Only the total supply of a given systemic stablecoin is capped, and that cap is temporary - the BOE says it will phase out the guardrail as the market matures.

Reserve Relaxation and Yield Permissions

The BOE also cut the required share of backing assets held in non-interest-bearing central bank deposits from an unspecified earlier level to 30%. That means stablecoin issuers can now allocate up to 70% of their reserves into short-term U.K. government debt (T-bills) with maturities under six months. Issuers can harvest yield from those T-bills, but the BOE strictly bans paying interest or dividends to users for simply holding the stablecoin. However, activity-based rewards - cash-back tokens, loyalty points tied to payment transactions via Web3 apps - are explicitly permitted. This is a carefully drawn line: issuers get a revenue source, but the stablecoin itself can't become a yield-bearing instrument.

Industry Pushback and 2027 Timeline

The reversal follows a consultation period that ended earlier this month and a report from the U.K. Parliament's Financial Services Regulation Committee. The BOE acknowledged that its original restrictions affected business model viability and international competitiveness. A final feedback window closes in September, after which the new framework clears the path for regulated stablecoins to go live in the U.K. in 2027, when the country's comprehensive crypto rules are expected to take effect. For stablecoin issuers eyeing the U.K. market, the message is clear: bring your systemic risk management, not your retail censorship.

Source: Bank of England backs down on strict stablecoin holding limits, sets $50 billion issuance cap
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