Bank of England Softens Stablecoin Rules with £40 Billion Issuance Limit

The Bank of England has published its final stablecoin policy and draft rules, delivering a softer framework than initially proposed. The new rules replace individual holding caps with a total issuance cap of £40 billion per stablecoin. This shift moves the BoE's systemic risk management approach from the individual level to the aggregate level.

According to the source, the BoE had signaled in May that it was reconsidering parts of its framework after crypto companies warned that holding caps and strict reserve requirements could stifle adoption and push issuance offshore. The final framework reflects this feedback directly. Individual caps were operationally unworkable for institutional transactions, and the reserve proposals had been criticized as making UK stablecoin issuance economically unviable relative to lighter-touch offshore alternatives.

The softened UK approach arrives in a competitive global context. The US has passed stablecoin legislation designed to enhance dollar stablecoin dominance, posing direct competitive pressure to non-dollar stablecoin initiatives. The UK's lighter final rules may reflect an acknowledgment that overly restrictive regulation would cede ground to dollar stablecoins and offshore issuers without meaningfully reducing systemic risk.