BoE Shifts Stance on Stablecoin Rules, Introduces Temporary Issuance Cap

The Bank of England (BoE) has revised its proposed rules for stablecoins, softening its stance on individual and business holdings. The central bank initially planned to limit individuals to holding £20,000 worth of stablecoins and businesses to £10 million. However, after receiving feedback from industry participants, the BoE decided to introduce a temporary £40 billion cap on the total issuance of each systemic sterling-backed stablecoin instead.

This change marks a shift in the central bank's approach, reflecting the growing view that stablecoins serve as a tool for payments and value transfer. Market participants and regulators now consider them more than just another crypto asset.

Renna Ba, Head of Ecosystem at Morph, commented on the growing role of stablecoins: 'It is evident that increasingly, people aren't looking at stablecoins as crypto tokens. They are looking at them as a more efficient way to move value, particularly across borders where traditional payment systems can still be slow, expensive and fragmented.'

The revised framework also includes more flexible reserve requirements for stablecoin issuers. They can now hold up to 70% of their reserves in short-term UK government bonds, compared with the previously proposed 60%. The remaining 30% must still be kept in non-interest-bearing accounts at the Bank of England.