Overview
- The Bank of England, which published its policy position and draft Code on Monday, June 22, removed proposed per-user holding limits and set a temporary £40 billion issuance cap for each systemic sterling stablecoin.
- Issuers may back up to 70% of reserves in short-term UK government debt with the remaining 30% held as non-interest-bearing deposits at the Bank of England and firms are barred from paying interest to passive coin holders.
- The draft framework applies only to 'systemic' payment stablecoins with the BoE co‑regulating alongside the Financial Conduct Authority and requires prompt redemption, statutory trust or segregation arrangements and other consumer protections.
- Industry groups and a House of Lords committee forced the change after arguing wallet-level caps and high unremunerated reserve demands would have undermined business models and driven issuance offshore.
- The BoE is taking feedback on the draft until September 22, 2026 and aims to finalise the Code by the end of 2026 so regulated sterling stablecoins could begin operating in 2027, a shift that may alter bank deposit flows and issuer pricing decisions.