Bank of England removes wallet caps, sets £40B sterling stablecoin ceiling
In brief
- Bank of England removed individual and business holding limits for sterling stablecoins
- Each systemic stablecoin capped at £40 billion issuance, approximately $53 billion
- Backing assets can now reach 70% interest-bearing UK government debt, up from 60%
- Regulated sterling stablecoins expected to launch in 2027; consultation closes September 22, 2026
Wallet caps dropped, issuance guardrails remain
The central bank removed proposed holding limits for individuals and businesses, a significant shift from its November 2025 consultation. That earlier proposal had considered temporary per-coin limits of £20,000 for individuals and £10 million for businesses. The new policy abandons those constraints entirely.
Instead, the Bank replaced wallet-level caps with a temporary £40 billion issuance guardrail for each systemic sterling stablecoin product. A £40 billion cap translates to around $53 billion — well below either of the top dollar coins. USDT has a market capitalization of roughly $186 billion, while USDC has around $74 billion.
The Bank is reserving the right to adjust these limits. It's reserving the right to slow the growth of stablecoins until satisfied they won't drain deposits from the banking system quickly enough to undermine access to credit.
Backing asset rules loosened
The Bank raised the share of backing assets that may be held in interest-bearing securities. Under the previous proposal, issuers could hold up to 60% of backing assets in short-term UK government debt and had to keep at least 40% in unremunerated Bank deposits.
The new rules are more flexible. Up to 70% of backing assets may now be held in interest-bearing short-term UK government debt, while the remaining 30% must be held in central bank deposits. This shift reduces the yield drag on issuers and makes sterling stablecoins more commercially viable.
Timeline and next steps
The policy statement and draft Code of Practice were issued on June 22. The Bank's draft rules consultation closes on Sept. 22, 2026, with the Code of Practice intended to be finalized by the end of the year. Regulated stablecoins are expected to operate in the UK from 2027.
The FCA's stablecoins sandbox cohort includes firms testing UK stablecoin services, including Monee, ReStabilise, Revolut, and VVTX. These pilot programs will run in parallel with the formal consultation, giving the regulator real-world data on how sterling stablecoins behave in a UK payments context.
