Bank of England Eases Stablecoin Rules, Imposes £40B Issuance Cap

The Bank of England has relaxed proposed stablecoin rules in response to feedback from the crypto and financial sectors. The revised framework includes lower reserve requirements, removal of holding limits, and a temporary £40 billion issuance cap for major issuers.

Under the new rules, systemic stablecoin issuers will be required to hold 30% of their reserves as cash at the Bank of England, with up to 70% allowed to be invested in UK Treasury bills. This reduction from an initial proposal of 40% cash and 60% short-term government debt aims to make the country more attractive for stablecoin issuers while maintaining financial safeguards.

The Bank also dropped plans to limit individuals to holding £20,000 in stablecoins and businesses to £10 million, instead implementing a temporary £40 billion cap on each systemic stablecoin's total amount in circulation. This measure is designed to slow deposit migration from traditional banks into stablecoins and prevent any negative impact on the banking sector.