Britain scrapped its plan to cap how much stablecoin you're allowed to own. What's left is a ceiling on the issuers themselves, and a deadline the Bank of England is determined not to miss.

The Bank of England spent 2026 walking back one of the most contested ideas in its own rulebook. In November 2025, it proposed that anyone holding a systemic sterling stablecoin would face a cap: £20,000 for individuals, £10 million for businesses. By June 22, 2026, that idea was dead. The Bank published its final policy statement and a draft Code of Practice that dropped the individual limits entirely, replacing them with a £40 billion issuance guardrail applied to each systemic stablecoin issuer instead of each customer.

That's a real reversal, not a tweak. A £20,000 cap would have meant a UK resident couldn't hold more sterling stablecoin than the price of a decent used car without their issuer flagging it. Industry pushback made the case that forcing every wallet into a ceiling would just send sterling stablecoin activity offshore, according to reporting from The Block. The Bank apparently agreed enough to drop the idea rather than defend it.

Now the fight has moved to the Code of Practice, the document that actually tells issuers how to run a systemic stablecoin day to day: backing assets, safeguarding, capital, resolution. Feedback on that draft closed on September 22, 2026. The Bank says it intends to finalize the Code by the end of this year, with the full regime taking effect in 2027.

The £40 billion figure isn't arbitrary generosity. It's a guardrail, reviewed regularly, built to be removed once the Bank decides sterling stablecoins no longer threaten how much money stays inside the regular banking system. That's the actual worry underneath this whole framework: if enough deposits migrate out of banks and into stablecoins, banks have less to lend against, and mortgage funding gets tighter. An issuance cap targets that systemic risk directly. A per-person holding cap targeted the same risk indirectly, and clumsily, by making it annoying for any single customer to hold much. Dropping the personal cap in favor of a cap on the issuer is the Bank admitting the first version solved the problem at the wrong end.

HM Treasury confirmed on August 27 that the Bank of England will get a new statutory duty to support stablecoin and payments innovation, sitting beneath its financial stability mandate. The shift follows the Bank's reversal on stablecoin holding limits and comes as it finalizes a Code of Practice ahead of a 2027 regulated regime. - bank of england stablecoin innovation legal duty - how central banks support digital money innovation

The Bank also loosened the reserve rules alongside the guardrail. Issuers can now hold more of their backing assets in short-term UK government debt, up from 60% toward 70% under the June policy statement, with some reporting suggesting new entrants could be allowed even higher. Less cash has to sit in unremunerated accounts at the Bank of England. That's a real concession to issuers who complained the original split made running a sterling stablecoin barely profitable.

Deputy Governor Sarah Breeden framed the whole June announcement around pace, not caution, saying the UK would move its stablecoin framework "just as quickly as the US." That line only makes sense against what's happening across the Atlantic. The GENIUS Act, the US federal stablecoin law signed in July 2025, set its own rulemaking deadline for July 18, 2026. Regulators missed it. Enforcement is now expected to begin sometime in early 2027, depending on who you ask, with no legal penalty for the missed deadline itself. The country that passed the first comprehensive stablecoin law is still writing the rules for it more than a year later.

That's the backdrop the Bank of England is racing against. Not a finished American rulebook to copy, but a comparably unfinished one, moving at a similar, frustrating pace, with a UK regime that genuinely could land its final Code of Practice before the US locks in its own enforcement mechanics.

Treasury changes its mind too

The regulatory picture got more complicated from a different direction this year. HM Treasury had told the industry, as recently as a few months earlier, that it would not bring stablecoin payments inside the UK's payment-services regulatory perimeter. Economic Secretary to the Treasury Lucy Rigby then reversed that position, announcing plans to fold stablecoins into payment services regulation after all, alongside a broader push to modernize the UK's payments rulebook and cut red tape for firms offering stablecoin payment services.

It's a genuine about-turn, not a clarification. Labour had already dropped a near-identical 2022 plan to bring stablecoins under the Payment Services Regulations after taking office in 2024. Two years later, the government landed back where it started, just with a Bank of England stablecoin regime now largely built around it.

For issuers like Circle and Tether, who've been watching this process from the outside, the practical question was never whether the UK would regulate sterling stablecoins. It was whether the rules would let anyone actually make money running one. A £40 billion ceiling per issuer and a looser reserve mix answer that more generously than the original proposal did. Whether thin margins on sterling-denominated coins make the UK market worth entering at all, once 2027 arrives and the rules are live, is the question nobody has answered yet.

Also read: Visa and Mastercard shares sink as Walmart and Amazon eye stablecoins • Bhutan charters a new central bank with the power to hold Bitcoin • Balancer Labs shuts down a year after its $128 million hack exposed a rounding bug

The Bank of England published its final stablecoin framework on June 22, replacing controversial individual holding limits with a £40 billion issuance guardrail per coin and granting issuers greater flexibility on reserve composition. The decision puts the UK alongside the EU and US as one of three jurisdictions with a binding stablecoin regime... - bank of england stablecoin regulations - UK stablecoin issuance limits

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