In a major victory for the cryptocurrency industry, the Bank of England has officially discarded its proposed limits on individual crypto holdings and replaced them with a temporary £40 billion limit on stablecoin issuers.
By Ana Gonzalez | June 23, 2026
For everyday cryptocurrency investors, this policy update directly impacts how you manage your portfolio. In its initial proposals, the central bank suggested placing strict caps on how much digital money a single person or business could hold in their digital wallet, which acts like a bank account for crypto. Under those old rules, you would have been restricted to holding a maximum of £20,000 in stablecoins, while businesses would have faced a limit of £10 million. This would have made it very difficult to use stablecoins as a safe haven during periods of intense market volatility.
With major crypto assets like Bitcoin trading at $64,000, Ethereum at $1,721, and Solana at $72, stablecoins play a vital role. These digital tokens are pegged to traditional fiat currencies, such as the British pound or the US dollar, keeping their value steady. Investors use them to park cash and lock in profits without withdrawing their funds back into the traditional banking system. By removing the individual limits, the Bank of England is making it much easier for you to protect your portfolio value during market downturns without worrying about hitting an arbitrary limit.
The Legislative Move
The regulatory shift comes from a policy statement and a draft Code of Practice published by the Bank of England on June 22, 2026. This new document sets out the rules for what the central bank calls “systemic stablecoins.” A systemic stablecoin is a digital currency that is backed by traditional money and is used so widely that its failure could hurt the entire financial system—similar to how a major bank going under can affect the whole economy. Rather than policing the digital wallets of individual users, the central bank has decided to regulate the issuers of these coins directly.
The new framework introduces a temporary £40 billion issuance cap per systemic stablecoin. This means a single stablecoin company cannot issue more than that total amount of digital coins. In addition, the central bank updated its rules on how stablecoin companies must back their tokens. To ensure that investors can always swap their stablecoins back for real cash, issuers must hold safe reserve assets. Under the new guidelines, issuers can hold up to 70% of their backing assets in short-term UK government debt (also known as gilts), which are essentially loans to the British government and are considered extremely safe. The remaining 30% must be held in cash in non-interest-bearing deposits directly at the Bank of England.
Here are the key data points you need to know about the new regulatory rules:
- £40 billion — The new temporary limit on the total value of digital coins a single systemic stablecoin company can issue.
- 70% — The maximum share of reserves that issuers are allowed to hold in short-term UK government bonds to earn interest.
- 30% — The portion of backing reserves that must be kept as cash in non-interest-bearing deposits at the central bank.
- £20,000 — The originally proposed individual wallet holding limit that has now been completely abandoned.
- £10 million — The corporate wallet holding limit from the previous proposal that has also been discarded.
Jurisdiction Context
This regulation applies specifically within the United Kingdom, where regulatory oversight is split between two primary watchdogs. Once a stablecoin grows large enough to be recognized as “systemic” by the UK government’s Treasury department (known as HM Treasury), it falls under the joint supervision of both the Bank of England and the Financial Conduct Authority (FCA). For smaller, non-systemic stablecoins, the FCA remains the sole regulator, applying standard consumer protection and market conduct rules.
The Bank of England acts as the macroprudential regulator, meaning its job is to keep the entire financial system stable. It wants to prevent a scenario where millions of people suddenly run to withdraw money from stablecoins, causing a run on the banks that back them. By contrast, the FCA is the conduct regulator, focused on protecting consumers from fraud and ensuring that exchanges and digital wallet providers treat their customers fairly. Under the UK’s financial services laws, both regulators must collaborate to ensure that stablecoins do not destabilize the broader economy while still allowing the technology to grow.
Industry Reaction
The cryptocurrency sector responded with a mixture of relief and caution. Many industry leaders cheered the removal of the individual wallet limits, which would have required companies to build complex, expensive software to track user balances across thousands of wallet addresses. Coinbase Chief Legal Officer Paul Grewal praised the regulators on social media, noting that the crypto industry pushed for clear, workable rules and the UK government delivered. By focusing on the issuers rather than individual users, the UK has made it easier for foreign firms to launch products in the country.
However, some industry groups argue that the rules are still too strict and could harm the UK’s global competitiveness. Janine Hirt, the CEO of Innovate Finance, warned that the framework remains overly cautious. She pointed out that the UK risks creating the most conservative stablecoin regime in the world, which might discourage new startups from setting up shop in London. Other major jurisdictions, including the United States, the European Union, Singapore, the United Arab Emirates, and Canada, are also racing to establish their own stablecoin rules, and some of these regions may offer more flexible environments for digital asset companies.
Compliance Hurdles
While the new rules are simpler than the old ones, stablecoin issuers still face significant compliance hurdles. The largest obstacle is the requirement to keep 30% of their backing reserves in non-interest-bearing accounts at the Bank of England. Because this money earns zero interest, stablecoin companies cannot make a profit on nearly one-third of their assets. This rule could make it hard for smaller stablecoin startups to survive, as they will have to rely entirely on the interest generated by the 70% they hold in government debt to cover their operating costs.
Another major challenge is navigating the dual regulatory oversight of both the central bank and the FCA. Working with two different government agencies means companies will have to deal with double the paperwork and compliance audits, driving up legal costs. Finally, the temporary nature of the £40 billion issuance cap creates uncertainty. Because the central bank can change or lower this cap at any time to protect the banking sector, stablecoin issuers will find it difficult to make long-term business plans or secure large investments from traditional financial firms.
What’s Next
The publication of this draft Code of Practice is not the final step. The Bank of England has opened the draft rules for public feedback, and the consultation period will remain open until September 22, 2026. During this time, crypto companies, banks, and consumer advocacy groups can submit comments and request further changes. The central bank plans to review this feedback and finalize the Code of Practice by the end of 2026.
According to the current timeline, the full stablecoin regulatory framework is expected to become operational in 2027. For everyday investors, the main things to watch are which stablecoins will receive the official “systemic” designation from HM Treasury and how issuers adjust their backing reserves to comply with the new ratios. If the UK can strike the right balance, these rules could pave the way for wider institutional adoption of stablecoins, making them a safer and more reliable tool for your crypto portfolio.
Disclaimer
The cryptocurrency market remains highly volatile. This article is for informational purposes only and does not constitute financial advice.
£40 billion sounds massive until you realize Circle alone processes more than that daily. this is a cap dressed up as freedom
boe_watcher_ the old 10M business cap wouldve killed any medium fintech using stablecoins for settlement. glad someone at the bank finally did the math
night_shift the old 10M business cap would have killed any medium fintech using stablecoins for B2B settlement. boe dodged a bullet by scrapping it
Priya N. the 10M business cap would have killed any mid-sized fintech using stablecoins for payroll or cross border. BOE dodged a massive policy failure
boe_watcher_ Circle processing more than 40B daily is the exact reason this cap is cosmetic. the real systemic risk is issuer concentration not user holdings
thames_fog circle doing 40b daily shows the 20k cap was always just for show on retail
Dorothy E. Circle doing 40B daily proves the cap on issuers is the right lever. the old 20K individual limit was just regulatory theater
scrapping the 20K individual cap was the only sensible move. you cant tell people their stablecoin holdings are capped at less than half a BTC and expect adoption
governance_nerd_ capping at 20K while minimum wage in london is 11.44 an hour. the proposal was never going to survive contact with reality
the £20k individual cap was never going to fly. imagine telling someone they can only hold 20k while inflation eats the pound alive
exactly, 20k is like two months of groceries in london now. they pivoted because they had to, not because they wanted to
fiat_refugee_pl 20k in london is like 6 weeks of rent. they pivoted because the cap was economically illiterate not because they wanted to
20k barely covers one month rent in zone 2 so this rule hits normal folks hardest
40B limit on issuers is interesting. basically saying we trust the rails but want a ceiling on systemic risk. pragmatic approach honestly
calling this a temporary 40B cap is doing a lot of heavy lifting. temporary in regulator speak usually means permanent until they say otherwise
ledger_watch_ temporary in regulator speak means they will review it in 3 years and extend it. that is how these things always go
Reinhold S. pragmatic is generous. they dragged their feet for 2 years on the 20k cap before common sense prevailed
the old proposal would have killed UK stablecoin adoption dead. 20K cap for individuals is basically pocket change in london
BTC at 64K and ETH under 2K in the same article. rough market but at least the UK is removing friction for stablecoin use
scrapping the 20k individual limit was inevitable. you cant tell someone they can only hold 20k of a stablecoin when minimum wage in london is already 11.44/hr
40B systemic cap on issuers is smart regulation actually. punishes the operator not the user. should be the template everywhere
thames_ exactly. 40B on issuers not users is how you regulate without strangling adoption. boe actually listened for once
boe finally dropped the silly limits after seeing how much stablecoin volume actually moves daily
imagine capping individuals at 20k while circle processes billions daily. the disconnect was embarrassing
calling a 40B cap temporary is doing heavy lifting. in regulator speak temporary means permanent until they feel like revisiting it in 5 years
gwp_ratio_ regulators using temporary is genuinely concerning. look at how many temporary EU crypto frameworks became permanent with zero review