Latest The UK softened stablecoin rules, but may still be capping its own market in

Cryptocurrency news The Bank of England has dropped the piece of its stablecoin plan that the industry hated most, the proposed £20,000 limit on how much sterling stablecoin any one person could hold, along with the £10 million ceiling for businesses. In their place, the central bank’s June 22 policy statement set a single £40 billion cap on how much of each systemic sterling stablecoin can exist in the UK, and loosened the reserve rules so issuers can finally earn a decent yield on the money backing their coins. Households and companies can now hold as much of a regulated pound stablecoin as they like, and any one of those coins can grow to £40 billion before it has to stop. This puts the UK in a rather unusual spot among large economies. The US and the EU both regulate stablecoins heavily, yet neither puts a hard ceiling on how large a token denominated in its own currency may become. The UK was the first to do that, while calling the limit “temporary” and promising to review it.

Sterling tokens account for roughly 0.5% of a global stablecoin market worth around $315 billion, which puts the real test of the new regime well past legality and onto whether a pound coin can ever grow large enough to rival the dollar tokens that already run global crypto liquidity. A friendlier framework with the growth ceiling left in place The reversal on holding caps came after months of pressure. A cross-party House of Lords committee told the Bank in early June that wallet-level limits diverged from global norms and had alarmed founders, and that issuers had spent the consultation period arguing that caps on individual balances are nearly impossible to enforce across wallets and exchanges. Dropping them clears one of the biggest sources of friction for anyone who wants to use a sterling stablecoin for something bigger than pocket-money payments, since cross-border settlement and collateral posting were effectively off the table under per-user limits. The change that does the most for issuer economics comes from the reserve rules, which are easy to miss. Stablecoin issuers make most of their money from reserve income, the yield they earn on the assets backing each coin, so the split between interest-bearing government debt and non-yielding central bank deposits decides whether the business works at all.

The Bank’s November 2025 draft would have required systemic issuers to park 40% of their backing as unremunerated deposits at the Bank of England, with the remaining 60% in short-term gilts. The new framework cuts the deposit requirement to 30% and allows issuers to hold up to 70% in short-dated UK government debt, with a step-up that allows coins deemed systemic at launch to start at 95% in gilts and scale down as they grow. More of the float now earns a return, which is the difference between a viable sterling stablecoin and one that loses money against dollar rivals holding Treasury bills. The £40 billion ceiling sounds generous, and for a purely domestic payment instrument,  » …

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Carla Contass

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