The Bank of England has reversed its earlier proposal to impose individual holding limits on stablecoins, replacing them with a temporary aggregate circulation cap of £40 billion for any single systemic stablecoin. The central bank also reduced the required proportion of non-interest-bearing central bank deposits backing stablecoins from an unspecified higher level to 30%, allowing issuers to invest up to 70% of reserves in short-term UK government debt. However, direct interest or dividend payments to stablecoin holders remain prohibited, while transaction-based rewards like cash-back or loyalty points are permitted. The reversal follows industry backlash and a House of Lords committee report warning the original limits would harm business viability and competitiveness. The Bank of England intends to phase out the aggregate guardrail as the market matures, with full UK crypto rules expected by 2027. This decision marks a significant victory for the crypto industry, removing restrictions on individual transaction amounts and frequency.

Key facts

• UK central bank abandons individual and corporate stablecoin holding limits.
• New aggregate cap of £40 billion per systemic stablecoin.
• Issuers can now invest 70% of reserves in UK T-bills; 30% in non-interest deposits.
• Direct interest payments to holders banned; transaction-based rewards allowed.
• Full crypto regulations expected by 2027; guardrail phased out over time.

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