The Bank of England has published its final policy framework and draft rules for systemic stablecoins, replacing proposed user holding caps with a temporary £40 billion issuance guardrail for each systemic stablecoin product.
The new systemic stablecoin framework marks a major shift from the Bank’s earlier proposal, which would have limited individuals to £20,000 and businesses to £10 million per systemic stablecoin. The BOE now says it will not implement per-coin holding limits for individuals and businesses, citing operational complexity, enforcement costs, privacy concerns and disruption to business use cases.
The replacement is a temporary issuance limit. Each systemic stablecoin will start with a maximum issuance guardrail of £40 billion, calibrated to manage the same credit-provision risks the BOE had previously tried to address through user-level caps. Individuals and businesses will be able to use systemic stablecoins without limits on transaction size, frequency or type, unless other laws or regulatory requirements apply.
The Bank said the guardrail will be reviewed regularly and could be loosened or removed once officials are satisfied that risks to bank credit provision have been addressed. The consultation on the draft Code of Practice closes on September 22, 2026, and the BOE intends to finalize the rules by the end of 2026.
The framework also changes the reserve composition for systemic stablecoin issuers. The BOE will allow issuers to hold 70% of backing assets in short-term UK government debt, up from the previous 60% proposal. The remaining 30% must sit in unremunerated central bank deposits.
That 70/30 split gives issuers more room to earn yield on backing assets, but the 30% non-interest-bearing requirement remains one of the most contested parts of the regime. The BOE argues that the central bank deposit layer is needed to support redemptions, protect the singleness of money and reduce the risk of disorderly asset sales during stress. Issuers must maintain one-to-one backing at all times and manage redemption liquidity within the framework.
Aave founder Stani Kulechov criticized the remaining reserve requirement, warning that forcing issuers to hold 30% of backing assets in non-interest-bearing central bank deposits could make UK issuance unattractive and push stablecoin activity offshore. His concern focuses on issuer economics: a large zero-yield reserve bucket reduces revenue, weakens competitiveness against U.S. or offshore stablecoin models, and may make pound-backed stablecoins harder to scale.
The criticism lands even after the BOE softened its stance. Kulechov had previously welcomed the retreat from strict user holding caps, but the final framework still leaves UK issuers with a heavier reserve drag than regimes built around Treasury bills, commercial custodians and private-market yield.
The framework gives the UK a clearer route for regulated sterling stablecoins, but it also shows how differently London is approaching the market from the U.S. The American stablecoin debate has moved toward issuer licensing, reserve quality, redemption rules and customer checks, including new compliance work around stablecoin issuer KYC requirements.
The UK is trying to build a payments-grade model around systemic stablecoins that could be used at scale without draining bank deposits too quickly. That is why the BOE dropped direct user caps but kept an aggregate issuance guardrail, central bank deposit backing and 24-hour redemption expectations.
The move also connects with the Bank’s wider payments modernization agenda. The UK has already been pushing settlement infrastructure toward longer operating hours as stablecoins, tokenized deposits and tokenized securities move closer to real payment use cases, with the BOE earlier outlining a path toward near 24/7 settlement as stablecoin caps softened.
The final rulemaking now sits on a defined calendar: responses are due by September 22, the Code of Practice is targeted for completion by end-2026, and recognized systemic stablecoin issuers will face a £40 billion issuance guardrail, 70% short-term gilt backing capacity and a 30% non-interest-bearing central bank deposit requirement.
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