BoE drops wallet caps but keeps a £40B limit on pound stablecoins

The Bank of England has made the UK's stablecoin regime easier to use, but it still limits how large any regulated sterling stablecoin can become. For crypto markets, that matters because scale drives liquidity, settlement use, and merchant adoption.

In its June 22 policy statement, the BoE scrapped proposed holding limits of £20,000 for individuals and £10 million for businesses. Users and companies can now hold as much of a regulated pound stablecoin as they want. But the central bank kept a separate ceiling: each systemic sterling stablecoin can grow only to £40 billion before it must stop.

The BoE also improved issuer economics. Its earlier draft would have forced systemic issuers to keep 40% of reserves in non-interest-bearing deposits at the central bank and 60% in short-term gilts. The new framework lowers the deposit share to 30% and allows up to 70% in short-dated UK government debt. Tokens classified as systemic at launch can begin with 95% in gilts, then scale down as they grow.

That should help issuers earn more reserve income. Still, sterling stablecoins start from a small base, about 0.5% of the roughly $315 billion global stablecoin market, while about 98% of supply is denominated in dollars. The UK has removed one barrier to adoption, but the market-wide cap remains a constraint that the US and EU do not impose on domestic-currency stablecoins.