The U.K. central bank has dropped its proposed caps on individual stablecoin holdings, opting instead for a £40 billion aggregate issuance limit while easing yield restrictions for issuers ahead of a targeted 2027 launch.
The Bank of England formally abandoned its controversial plan to restrict how much stablecoin consumers and businesses could hold, following pushback from lawmakers and the crypto industry.
In a statement released Monday, the bank confirmed it will no longer pursue the previously suggested £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.
The BoE also revised reserve requirements, lowering the portion of assets that must be held in non-interest-bearing central bank deposits to 30%. This adjustment allows issuers to invest up to 70% of reserves in short-term U.K. government debt, such as Treasury bills with maturities under six months, enabling them to generate yield.
While issuers can benefit from these returns, they remain prohibited from passing interest or dividends directly to users simply for holding stablecoins. However, the bank will allow usage-based incentives, including cashback rewards or loyalty programs tied to transactions via Web3 platforms.
The central bank acknowledged that feedback from its recent consultation highlighted concerns that earlier restrictions could undermine business models and weaken the U.K.’s global competitiveness. It said these concerns prompted a recalibration of its approach.
The policy shift follows a report from a parliamentary committee warning that the initial limits could significantly impact the viability of stablecoin issuers.
The reversal marks a win for the crypto sector, which had criticized the earlier proposals as overly conservative and restrictive to innovation.
Under the revised framework, both individuals and businesses will face no limits on stablecoin holdings or transaction activity. The BoE said the new issuance cap is intended to safeguard the broader financial system from risks such as sudden capital outflows, while still supporting innovation and growth.
The bank added that it may gradually scale back and eventually remove the cap as the market matures. After a final consultation period ending in September, the framework is expected to pave the way for regulated stablecoins to launch in the U.K. by 2027, alongside the country’s broader crypto regulatory rollout.
