The Bank of England revised its approach to systemic sterling stablecoins on June 22, increasing the share of reserves that could be held in short-term government debt and replacing proposed individual holding limits with an aggregate issuance guardrail.
The publication combines a policy statement with a consultation on a draft Code of Practice. The Bank intends to finalize that code by the end of 2026, so the policy decisions and the completion of the rule-making process should not be treated as the same event.
The reserve mix moves to 70/30
The revised steady-state policy permits 70% of backing assets in short-term UK government debt and requires 30% in unremunerated Bank of England deposits. The November consultation had proposed a 60/40 split.
The June document allows qualifying government debt with residual maturities of up to six months and permits overnight repo and reverse-repo transactions within its stated conditions.
A step-up approach remains for firms recognized as systemic at launch, allowing up to 95% in qualifying government debt while they scale. The Bank presents this as a balance between issuer viability and the liquidity needed for reliable redemption.
It also confirms plans for a central-bank liquidity backstop, while retaining restrictions on broader reserve assets such as commercial-bank deposits.
An issuance guardrail replaces individual caps
The November proposal included per-coin holding limits of £20,000 for individuals and £10 million for businesses. After feedback about complexity and operating constraints, the Bank has changed course.
The new policy uses a temporary guardrail on the total issuance of each systemic stablecoin, initially set at £40 billion. The Bank says it will review the guardrail and remove it when risks to credit provision have been sufficiently mitigated.
This is a material change for implementation: it shifts the control from monitoring each customer’s holdings to constraining aggregate issuance.
The regime still concerns systemic stablecoins recognized by HM Treasury, with joint Bank and FCA oversight. It should not be read as a general cap on every stablecoin traded in the UK.
