The Bank of England has backed away from the strictest parts of its proposed stablecoin regime, dropping the individual holding cap it floated last year and lowering how much backing issuers must park at the central bank. Cointelegraph and WuBlockchain both reported the shift on June 22, 2026, citing the Bank's revised position. It marks one of the clearest regulatory reversals on crypto by a G7 central bank.
The original plan, published in a November 2025 consultation, would have capped retail holdings of any systemic sterling stablecoin at GBP 20,000 per person and GBP 10 million per business. It also asked issuers to hold a large share of their reserves as unremunerated deposits at the Bank of England, with the rest in short-term UK government debt. Industry groups, and later a House of Lords committee, pushed back hard, arguing the rules would drive issuers and users offshore before a UK market could form.
The caps that are going away
The headline change is the removal of the per-person holding limit. Rather than tracking how many tokens sit in each individual wallet, the Bank is moving toward aggregate issuance caps placed on the providers themselves. That is a meaningful design switch. A wallet-level cap forces issuers and any connected app to police individual balances; an issuance cap limits the total size of a token in circulation without telling any single holder how much they may keep.
For a UK resident, the practical effect is direct. A GBP 20,000 ceiling would have limited the balance someone could keep in a regulated sterling stablecoin, which is precisely the balance that would fund a stablecoin-based card or a day-to-day spending wallet. Removing it clears one of the more awkward frictions in the original draft.
The Bank also signaled it will lower the reserve floor held at the central bank to roughly 30 percent, down from the 40 percent in the first proposal. The remainder would sit in short-dated gilts. Deputy Governor Sarah Breeden has acknowledged the first version may have been overly conservative, and said the reserve thinking was shaped by the deposit runs seen during the 2023 banking stress, including Silicon Valley Bank.
The economics behind the retreat
The reserve rule was the costlier half of the original plan. Unremunerated deposits earn nothing, so every pound an issuer is forced to hold at the central bank is a pound that cannot sit in interest-bearing gilts. Industry estimates put the carrying cost at over GBP 11 million a year for each GBP 1 billion in circulation under the 40 percent floor. Cutting the floor toward 30 percent and leaning more on government debt narrows that drag and improves the case for issuing a sterling stablecoin onshore in the first place.
There is a tradeoff the Bank is openly weighing. Central-bank deposits are the safest possible backing in a redemption panic, since they do not need to be sold into a stressed market. Gilts are highly liquid but still carry some price and liquidity risk if a large issuer has to dump them quickly. To bridge that gap, the Bank has discussed a liquidity backstop that would let systemic issuers monetise their backing assets during stress rather than fire-selling them. The softer reserve rule and the backstop are two sides of the same decision.
Spending stablecoins in the UK
A friendlier issuance regime makes UK-issued sterling stablecoins more plausible, and that matters for anyone who wants to spend stablecoins rather than hold them as a trade. Stablecoins are the settlement layer behind a growing set of crypto cards, and clearer, lighter rules in a major market tend to pull more issuers and card programs into that market. The UK has lagged the US and the EU here, partly because the proposed rules looked punitive next to the GENIUS Act framework taking shape across the Atlantic and the EU regime now hardening under MiCA.
Holders should keep the limits of this news in view. The Bank has revised its stance and is consulting on updated terms, but the final Codes of Practice are not expected until late 2026, so none of this is binding yet. The numbers can still move before they are law. The direction, though, is now clear: the UK wants regulated sterling stablecoins to exist at usable scale, not to be capped into irrelevance.
For people already holding or spending stablecoins, the change does not alter how custody risk works. A stablecoin balance is only as safe as the issuer behind it and the reserves backing it, which is exactly what these reserve rules are trying to govern. The shift toward gilt-heavy backing with a central-bank backstop is the Bank's attempt to keep that backing both safe and economically viable at the same time.
Overview
The Bank of England has scrapped its proposed GBP 20,000 individual holding cap on systemic sterling stablecoins, moving to aggregate issuance caps on providers instead, and signaled it will cut its central-bank reserve floor toward 30 percent from 40 percent. The reversal follows industry and parliamentary pressure and a Deputy Governor's admission that the first plan was overly conservative. Revised terms are out for consultation, with final rules due late in 2026.
