The Bank of England (BOE) has set out its proposed regulatory regime for stablecoins, confirming plans to impose limits on holdings per coin.
The Bank of England said on Monday it is proposing “temporary” limits of 20,000 pounds ($26,300) per month. coin for individuals and £10m for businesses.
The BOE added that these limits would be removed once the financial system has transitioned to incorporating stablecoins, digital tokens tied to the value of a traditional financial (TradFi) asset such as a fiat currency.
As previously reported, the BOE may also exempt businesses that need to hold large balances, such as crypto exchanges and even supermarkets, according to the consultation paper.
The BOE’s plans to introduce holding limits were met with criticism from some cryptocurrency groups, who branded them useless when they were first reported in September.
The industry groups warned that the UK would have stricter rules than jurisdictions such as the US or the European Union (EU), possibly making it a less attractive market in which to do business.
Sarah Breeden, the BOE’s deputy governor for financial stability, said recently that these limits were necessary to limit the risk of destabilizing the commercial banking sector that most people rely on for mortgages.
“These proposed steps, while appearing harsh at first glance, will benefit systemic stablecoins in the medium to long term to become a reliable method of value exchange and a true alternative to current forms of digital money,” said Etay Katz, head of digital assets at law firm Ashurst, in an emailed comment.
Bank of England Stablecoin Support Proposal
The BOE also proposed that stablecoin issuers could hold up to 60% of their collateral in short-term UK government debt, with the other 40% provided through unsecured Bank of England accounts.
An exception to this framework, however, are issuers of stablecoins transitioning to become systemic, which would be able to hold 95% of their back-end assets in short-term debt to support their early growth.
The central bank pointed out that its proposed framework only applies to “sterling-denominated systemic stablecoins” – digital tokens linked to the UK currency that can be used for retail payments and wholesale settlement. Stablecoins used for non-systemic purposes, such as trading in cryptoassets, will be regulated by the Financial Conduct Authority (FCA), the BOE said.
The BOE’s proposals are now open for consultation until February 10, 2026, after which it will finalize its rules setting out detailed requirements for stablecoin issuers later in 2026.
