The Bank of England has scrapped controversial individual holding limits for stablecoins, replacing them with a single £40 billion aggregate issuance cap per coin. The original proposal would have restricted individual holdings to £20,000 and business accounts to £10 million, creating operational headaches for exchanges and liquidity providers tracking individual balances. The new framework allows unlimited individual holdings while managing systemic risk at the issuance level.
The BoE also reduced reserve requirements, lowering mandatory non-interest-bearing central bank deposits from 40% to 30%, improving issuer economics. However, Coinbase’s Katie Harries highlighted two unresolved issues: how long the aggregate cap remains and whether stablecoins will be permitted for wholesale market settlement, critical for UK tokenisation ambitions.
The changes open the door for GBP stablecoins in cross-border settlement and collateral use, though the segment currently represents under 0.5% of the global stablecoin market. The framework positions the UK between America’s permissive GENIUS Act and the EU’s stricter MiCA regime.
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FXnCO Insight
** Firms planning GBP liquidity infrastructure should prepare for expanded stablecoin utility but await clarity on wholesale settlement approval before committing to tokenised payment rails.
Source: Finance Magnates