The Bank of England published its final policy and draft rules for systemic stablecoins on Monday, easing several proposals that the industry had warned could stifle the sterling-backed market. The central bank scrapped planned caps on individual holdings of stablecoins, replacing them with a temporary issuance limit per coin initially set at £40 billion ($52.8 billion). Additionally, it raised the proportion of backing assets that can be held in interest-bearing UK government debt from 60% to 70%, partially addressing industry concerns that earlier proposals left too much capital earning no return. The remainder must still be held in non-interest-bearing deposits at the Bank. Sarah Breeden, deputy governor for financial stability, called the framework a 'world leading regime' that balances innovation with trust. The easing follows months of lobbying from the crypto industry, which argued the original proposals would hurt UK competitiveness against US and European regimes. The Bank has warned that stablecoins, if widely adopted, could pull deposits out of banks and affect lending, but the new issuance limit is meant as a temporary guardrail to protect credit flows. The regime covers only 'systemic' stablecoins used widely in payments; tokens for crypto trading will be supervised by the Financial Conduct Authority. The Bank is accepting feedback until September 22 and aims to finalize rules by end of 2026, with regulated stablecoins expected to operate in the UK from 2027.

Key facts

• Bank of England drops individual holding caps, replaces with £40B issuance limit per stablecoin.
• Issuers can now hold up to 70% of reserves in interest-bearing UK government debt, up from 60%.
• Framework aims for regulated stablecoins to operate in UK from 2027.
• Rules cover only systemic stablecoins; crypto-trading tokens fall under FCA.
• Bank warns stablecoins could pull deposits from banks and affect lending.