The Bank of England (BOE) has outlined its proposed regulatory regime for stablecoins, confirming its plans to impose limits on holdings per currency.
The U.K. central bank said Monday it is proposing “temporary” limits of 20,000 pounds ($26,300) per currency for individuals and 10 million pounds for businesses.
The BOE added that these limits would be removed once the financial system has transitioned to incorporating stablecoins, digital tokens pegged to the value of a traditional financial asset (TradFi), such as a fiat currency.
As previously reported, the BOE may also exempt companies that need to maintain large balances, such as cryptocurrency exchanges and even supermarkets, according to the consultation document.
The BOE’s plans to introduce holding limits received criticism from some cryptocurrency groups, which called them unworkable, when they were first reported in September.
Industry groups warned that the UK would have stricter rules than jurisdictions such as the United States 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, recently said these limits were necessary to curb the risk of destabilizing the commercial banking sector, which most people rely on for mortgages.
“These proposed steps, while appearing harsh at first glance, will benefit systemic stablecoins in the medium and 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 proposals
The BOE also proposed that stablecoin issuers could hold up to 60% of their backing assets in short-term UK government debt and the remaining 40% through unremunerated Bank of England accounts.
However, one exception to this framework is stablecoin issuers transitioning to becoming systemic, who could hold 95% of their backing assets in short-term debt to support their initial growth.
The central bank noted that its proposed framework only applies to “sterling-denominated systemic stablecoins” – digital tokens pegged to the UK currency that can be used for retail payments and wholesale settlements. Stablecoins used for non-systemic purposes, such as trading crypto assets, would 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.
