Why Did the Bank of England Drop Stablecoin Holding Limits?
The Bank of England's policy statement and draft Code of Practice for sterling-denominated systemic stablecoins, published 22 June 2026, removed the proposed individual holding limits of £20,000 per person and £10 million per business entirely, replacing them with a temporary £40 billion issuance guardrail per systemic stablecoin product — a cap on how much of a coin can exist rather than on how much any one holder can own. Backing composition was revised to 30% unremunerated central bank deposits, down from 40%, and 70% short-term UK government debt of up to six months' maturity, up from 60%. Consultation closes 22 September 2026, with the Code to be finalised by end-2026 and implementation targeted for 2027.
TL;DR — Key Takeaways
- ✓What Was Dropped: Proposed individual holding limits of £20,000 per person and £10 million per business, removed entirely from the 22 June 2026 policy statement.
- ✓What Replaced Them: A temporary £40 billion issuance guardrail per systemic stablecoin product — a cap on total supply, not on any one holder's balance.
- ✓Backing Change: 30% unremunerated central bank deposits (down from 40%) and 70% short-term UK government debt up to six months' maturity (up from 60%).
- ✓Where the Burden Moved: From per-holder balance enforcement at the distributor to live total-supply monitoring at the issuer — harder for a multi-chain token than it sounds.
- ✓Timeline: Consultation closes 22 September 2026; Code to be finalised by end-2026; implementation targeted for 2027. The guardrail is expected to be removed once credit-provision risks are mitigated.
A Cap on the Coin, Not on the Holder
The Bank of England's earlier proposals for sterling systemic stablecoins included per-holder caps: £20,000 for an individual and £10 million for a business. The policy statement and draft Code of Practice published on 22 June 2026 dropped both entirely.
In their place sits a temporary £40 billion issuance guardrail per systemic stablecoin product. This is a different kind of instrument. A holding limit constrains distribution and is enforced where a balance is visible. An issuance cap constrains the aggregate and is enforced against a number that, for a multi-chain token, nobody currently computes in real time.
The industry read this as a relaxation, and on the user-experience question it plainly is — a £20,000 ceiling would have made a sterling stablecoin unusable for most business payments. What received less attention is that the compliance obligation did not disappear. It moved up the stack, from the wallet layer to the issuer, and it became a harder engineering problem in the process.
The parallel US rulemaking on issuer obligations is covered in Treasury's GENIUS Act NPRM and the issued-in-the-US perimeter.
Per-Holder Enforcement Is Easy; Total Supply Is Not
A holding limit is checkable at the point of transfer against a balance the ledger already exposes. An issuance guardrail requires an authoritative figure for how much of the token exists everywhere at once, and for a token deployed across several chains that figure is not a single ledger read.
The complications are ordinary rather than exotic, which is what makes them easy to underestimate. Supply sits on multiple chains with independent block times. Bridged representations may or may not be backed by locked units on an origin chain, and double-counting or under-counting both produce a wrong total. Wrapped versions issued by third parties may exist that the issuer did not create. A figure assembled from these sources is a reconciliation exercise, and reconciliation takes time that a cap breach does not allow.
| Control | Enforced by | Data needed |
|---|---|---|
| Per-holder limit (dropped) | Distributor, at transfer | One wallet balance, already on the ledger |
| Issuance guardrail (adopted) | Issuer, at mint | Consolidated supply across every chain, bridge and wrapper |
| Backing composition | Issuer, continuously | Reserve holdings by asset type and maturity |
What multi-chain deployment does to a single instrument — and why the same token behaves differently in different places — is examined in why one tokenized asset has two prices.
Ten Points From Unremunerated Deposits Into Short Gilts
The backing requirement moved to 30% unremunerated central bank deposits, down from 40%, and 70% short-term UK government debt of up to six months' maturity, up from 60%. That is a direct improvement to issuer economics: the central bank portion earns nothing by design, while the gilt portion earns a yield.
The two components do different jobs, which is why the split exists at all. Unremunerated central bank deposits are the certainty layer — instantly available, with no counterparty and no price. Short-dated gilts are the yield layer, and they carry the qualities that make a run manageable rather than eliminated: they must be sold to meet redemptions, and a large forced sale of six-month paper is easier than of longer duration but is still a sale into a market.
The six-month maturity ceiling is the part worth noting for anyone modelling reserve income. It caps how much yield the gilt portion can earn, because it forbids reaching for duration. An issuer cannot improve returns by extending maturity; the only lever left is the size of the book, which the £40 billion guardrail now also caps.
How reserve-asset eligibility interacts with tokenized money market funds is covered in tokenized MMFs as stablecoin reserve assets.
The Guardrail Is About Bank Lending, Not About Stablecoins
The Bank expects to remove the guardrail once risks to credit provision are mitigated, and that phrasing identifies the concern precisely. Money moving from bank deposits into stablecoins shrinks the deposit base that banks lend from, and a stablecoin backed by central bank deposits and gilts does not recycle that money into commercial credit.
Read that way, the £40 billion figure is not a judgement about how large a well-run stablecoin should be. It is a limit on how fast the transition can happen while the credit system adjusts. That has a practical implication for anyone building a business plan on it: the constraint is macroprudential and temporary in intent, so it may be raised or removed on a timetable driven by bank funding conditions rather than by anything the issuer does.
It also means the cap is per product rather than per issuer or per market. An issuer approaching £40 billion on one coin is not obviously prevented from operating a second, and the Code's treatment of that is exactly the kind of detail a consultation response should press on.
For how the UK regime sits alongside the EU one, see navigating MiCA for RWA tokenization and cross-border RWA regulatory challenges.
Build the Supply View Before the Code Is Final
Consultation closes on 22 September 2026, the Code is to be finalised by end-2026, and implementation is targeted for 2027. The parameters may still move, but the shape of the obligation almost certainly will not: an issuer will need to demonstrate aggregate supply against a cap. That capability takes longer to build than the rule takes to finalise.
What a total-supply capability has to answer
- What is the authoritative figure, and as of when? A number without a timestamp and a defined method is not evidence of compliance.
- How are bridged units counted? Locked-and-minted supply must be counted once, and the rule for it should be written down before an auditor asks.
- Are third-party wrapped versions in scope? If someone else wraps the token, decide now whether that is your supply or theirs.
- What happens at 90% of the cap? A control that only acts at the limit acts too late, given block times and reconciliation lag.
- Can minting actually be halted everywhere? A global cap needs a global stop, not a per-chain one.
A note on sourcing. The specific figures here — the dropped £20,000 and £10 million limits, the £40 billion guardrail and the 30/70 backing split — are consistently reported across law-firm analyses of the June statement, and the Bank's own announcement confirms the publication and its direction. Anyone relying on an exact threshold for a compliance build should read the draft Code itself, particularly while it remains in consultation.
For how these constraints propagate into collateral use, see stablecoins as RWA collateral, and for the structural overview our institutional guide to RWA tokenization.
Frequently Asked Questions
What did the Bank of England publish on 22 June 2026?
A policy statement and draft Code of Practice for sterling-denominated systemic stablecoins. The consultation on the draft rules closes on 22 September 2026. The Bank intends to finalise the Code by end-2026, with implementation targeted for 2027. The headline change from the earlier proposals is the removal of per-holder caps in favour of a cap on total issuance per product.
What replaced the proposed holding limits?
A temporary £40 billion issuance guardrail per systemic stablecoin product. The previously proposed individual limit of £20,000 per person and £10 million per business were dropped entirely. The distinction is structural: a holding limit caps how much any one person can own, while an issuance guardrail caps how much of the coin can exist at all, regardless of how it is distributed.
How did the backing composition change?
The required mix moved to 30% unremunerated central bank deposits, down from 40%, and 70% short-term UK government debt of up to six months' maturity, up from 60%. Shifting ten percentage points from unremunerated deposits into short-dated gilts improves issuer economics, because the gilt portion earns a yield the central bank deposit portion does not.
Why is an issuance cap harder for an issuer to comply with?
Because it requires a live view of total supply across every chain and venue where the token is deployed. A holding limit is enforced at the point of distribution, where a wallet's balance is already known. An issuance cap is a property of the aggregate, so a multi-chain token needs authoritative, near-real-time consolidation of supply across chains, bridges and any wrapped representations before it can prove it is under the cap.
Is the £40 billion guardrail permanent?
No. The Bank has described it as temporary and expects to remove it once risks to credit provision are mitigated. The concern behind it is deposit substitution: money moving from bank deposits into stablecoins reduces the funding base banks lend from. The guardrail is a control on that transition rather than a permanent view of how large a stablecoin should be.
What should an issuer do before implementation in 2027?
Build supply consolidation before it is needed, because it is an engineering programme rather than a reporting template. Establish an authoritative total-supply figure across all chains, decide how bridged and wrapped representations are counted, define what happens as issuance approaches the cap, and confirm that mint controls can actually halt issuance globally rather than on one chain. The rules are still in consultation until 22 September 2026, so the parameters may move.
Related Articles
Treasury's GENIUS Act NPRM and the US Issuer Perimeter
The parallel US rulemaking on stablecoin issuers.
Navigating MiCA Regulations for RWA Tokenization
The EU regime alongside which the UK rules sit.
Why One Tokenized Asset Has Two Prices
What multi-chain deployment does to a single instrument.
Stablecoins as RWA Collateral: The Compliance View
How stablecoin design affects downstream collateral use.