Bank of England softens stablecoin caps

The Bank of England said on May 19 that it is reconsidering one of the most restrictive elements of its proposed stablecoin regime: caps on how much any one user could hold. Instead, the central bank said it is looking at “temporary guardrails” on the total amount of stablecoins that could be issued under the framework, with draft rules due next month. Reuters and Bloomberg both reported the change after remarks from Sarah Breeden, the BoE’s deputy governor for financial stability. That matters because the Bank’s November 2025 consultation for sterling-denominated systemic stablecoins had proposed low temporary holding limits alongside strict reserve rules. Legal and industry summaries of that consultation said the draft framework included limits of £20,000 for individuals and £10 million for businesses, a structure critics said would make large-scale payments use difficult. (finance.yahoo.com) ### Why was the Bank of England rethinking user caps? Sarah Breeden said on May 19 that the BoE was weighing alternatives after industry pushback to holding limits. Reuters reported that the Bank now sees a cap on total issuance as one option that could address concerns about disruption to bank lending at a lower cost to the sector than hard limits on individual holdings. (bankofengland.co.uk) The Bank of England’s concern has been financial stability, not whether stablecoins can exist at all. Its 2025 consultation paper said systemic sterling stablecoins could become widely used in UK payments and therefore needed prudential controls, redemption requirements and backing-asset rules designed for a payment instrument that could scale quickly. (finance.yahoo.com) ### What was wrong with per-user holding limits? The November 2025 proposal treated holding caps as a temporary brake on rapid migration of deposits out of banks and into stablecoins. But lawyers and market participants reviewing the consultation said the proposed limits were far tighter than regimes developing elsewhere, including the EU’s MiCA framework, and could make UK-issued payment stablecoins uneconomic for common commercial uses. (bankofengland.co.uk) A per-user cap also creates operational friction for firms that want stablecoins for settlement, treasury transfers or other high-value payment flows. By contrast, an issuance cap would constrain the size of a stablecoin scheme overall while leaving tokens more usable inside the limit that regulators set. That is an inference from the structure of the two approaches, based on the BoE’s consultation and the alternatives described by Reuters. (humphreys.law) ### What does an issuance guardrail actually do? Reuters reported that the BoE is considering “temporary guardrails” on volumes issued rather than fixed limits on each wallet or customer. In practice, that would move the control point from the end user to the issuer: regulators would decide how much of a sterling stablecoin could circulate before tougher requirements or a new supervisory step applied. (finance.yahoo.com) The underlying policy goal remains the same. The BoE’s consultation said systemic stablecoins should be fully backed by high-quality liquid assets, with significant balances held at the central bank, and should support prompt redemption at par. The live debate is about which throttle best contains scale risk without making the product unusable for payments. (finance.yahoo.com) ### Why are crypto firms and payment companies watching this so closely? The UK framework applies to sterling-denominated systemic stablecoins — tokens large enough to matter for the financial system and payments infrastructure. For issuers and payment firms, the difference between a user cap and an issuance cap affects whether stablecoins can work for payroll, merchant settlement, wholesale transfers and other repeated payment uses. (bankofengland.co.uk) Bloomberg reported that the Bank was considering the alternative after a backlash from the industry. Reuters said draft rules will be published in June. Those rules will show whether the BoE formally replaces holding limits, keeps them in some modified form, or combines them with broader issuance controls for systemic sterling stablecoins. (bloomberg.com) (bankofengland.co.uk)