Bank of England Sets a £40B Cap per Systemic Stablecoin

The Bank of England set out on Monday how it intends to regulate systemic sterling stablecoins, publishing a policy statement and a draft Code of Practice, and attached a temporary limit: no single systemic coin may have more than £40 billion in issue. A systemic stablecoin, in the Bank's usage, is a payment system grown large enough that its failure would matter to the stability of the financial system as a whole, not only to the people holding the coin. The aggregate limit replaces the per-holder caps the Bank had previously proposed, £20,000 for individuals and £10 million for businesses, which have now been dropped. Feedback on the package is due by 22 September. The Bank said the regime is targeted at 2027 and will be supervised jointly with the Financial Conduct Authority.

A £40 billion ceiling per coin

The ceiling is denominated in sterling and set per coin rather than across the market, so each designated issuer could have up to £40 billion of its own token outstanding. The Bank described the limit as temporary, a feature of the transition into the regime and not a permanent parameter of it. Stablecoins are tokens issued against a pool of reserve assets and intended to hold a fixed value against a currency. The Bank's interest in them is a payments interest: a coin used widely for everyday or wholesale settlement is infrastructure, and its failure would land on the settlement system, not on one balance sheet. For scale, industry trackers have put total stablecoin issuance across all currencies above $300 billion this year. Almost none of it is in sterling.

A cap on the total, not on the holder

The two designs answer different questions. A per-holder cap limits how much of a coin any one person or firm may hold; it is aimed at the speed with which an individual saver could move money out of a bank deposit and into a token. An aggregate issuance cap ignores distribution entirely and constrains only the total in issue, the quantity that bears on system-wide stability. What matters for the banking system is how much money has moved, not how evenly it is spread. Enforcement differs as sharply. A total in issue is a figure the issuer already computes, checkable where coins are created and redeemed. A per-holder limit requires someone to identify every holder and police balances across wallets that can be split at will.

Feedback by 22 September, rules aimed at 2027

Comments on both documents close on 22 September. That leaves roughly three months for issuers, banks and payment firms to respond before the Bank moves to final rules. Supervision would be shared with the FCA, the conduct regulator, the Bank said, an arrangement that is standard in UK financial regulation but leaves firms answering to two authorities on different questions: the Bank on stability and the operation of the payment system, the FCA on conduct and market standards. The 2027 target date gives designated issuers a defined runway, not an immediate compliance obligation. By comparison, the European Union's MiCA rulebook is further along: its national grandfathering arrangements are due to end on 1 July, after which firms still operating without authorisation must stop taking on new EU clients.

The number binds nobody yet

The statement does not name a coin. Designation as systemic is a separate determination, and until one is made the £40 billion figure applies to nobody in particular. The word "temporary" is doing real work as well, since the Bank has said what the limit is without saying how long it lasts or what replaces it once the transition ends. The consultation period is the mechanism through which both the level and its duration can move, and the size of the number is the most obvious thing respondents will contest.