The Bank of England has relaxed its proposed restrictions on systemic stablecoins, introducing a £40 billion issuance cap instead of the earlier individual holding limits. The change, announced following a consultation, aims to prevent large-scale deposit outflows from the banking system while allowing households and businesses to use stablecoins without per-user restrictions.
Revised approach to systemic stablecoins
The Bank said the new cap is designed to achieve the same policy objective of financial stability as the original proposal, but with greater flexibility for users. Respondents to the consultation had warned that the earlier limits could hinder adoption and create operational hurdles for issuers. The regime applies only to stablecoins deemed systemic; those used primarily for crypto trading remain under the Financial Conduct Authority's oversight.
Industry feedback and competitiveness concerns
Deputy Governor Sarah Breeden indicated in May that the BoE was reassessing its stance after digital asset companies argued the restrictions could make UK-issued stablecoins less competitive against dollar-backed rivals. The revised rules are intended to support innovation while safeguarding credit availability. The £40 billion cap is set at a level the Bank believes will contain systemic risk without stifling market growth.