The Bank of England has relaxed its planned rules for stablecoins, removing limits on how much of a sterling-backed stablecoin an individual can own and making it easier for issuers to manage their reserves.
Instead of restricting individual holdings, the central bank will place a limit on the total amount of each stablecoin that can be issued. The initial cap has been set at £40 billion ($52.8 billion).
The Bank of England also increased the amount of reserve funds that issuers can invest in short-term government bonds. Under the new rules, up to 70% of reserves can be held in government debt, compared to the 60% limit proposed earlier. The remaining 30% must be kept as non-interest-bearing deposits with the central bank.
Sarah Breeden, the Bank of England’s Deputy Governor for Financial Stability, said the new framework is designed to protect users while encouraging innovation in digital payments. She described it as an important step toward giving people more payment choices and supporting the growth of new financial technologies.
The changes come after feedback from industry groups, which argued that ownership limits would be difficult to enforce and could slow the growth of sterling-backed stablecoins. Companies also warned that large reserve requirements could make stablecoin projects less attractive and less competitive.
Earlier proposals would have limited individuals to holding no more than £20,000 of a single UK stablecoin during the early adoption phase. Regulators had introduced the idea to reduce the risk of money moving out of traditional banks and into stablecoins.
After reviewing industry concerns, the Bank of England decided to shift its focus from limiting individual ownership to controlling the overall supply of stablecoins.
The move is part of the UK’s broader plan to modernize its financial system through digital assets, tokenized securities, and new payment technologies. Officials believe stablecoins could help make payments faster and cheaper, especially for international transactions, while maintaining strong protections for consumers and the financial system.
