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

The Bank of England published a policy statement and a draft Code of Practice on Monday setting out how it intends to regulate systemic sterling stablecoins, and attached to it a temporary limit of £40 billion on the amount any single systemic coin may have in issue. A systemic stablecoin, in the Bank's usage, is a payment system that has grown large enough that its failure would matter to the stability of the financial system as a whole rather than 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, and the Bank said the regime is targeted at 2027 and will be supervised jointly with the Financial Conduct Authority.

The Limit: £40 Billion in Issue per Systemic Coin

The ceiling is denominated in sterling and set per coin rather than across the market, so each designated issuer would be able to 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 rather than 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, and 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 rather than 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 in sterling.

The Instrument: An Aggregate Ceiling Replaces the Per-Holder Caps

The two designs answer different questions. A per-holder cap limits how much of a coin any one person or firm may hold, and 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, which is 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 and can be checked where coins are created and redeemed, whereas a per-holder limit requires someone to identify every holder and police balances across wallets that can be split at will.

The Timetable: Feedback by 22 September, a Regime Aimed at 2027

Comments on both documents close on 22 September, leaving roughly three months for issuers, banks and payment firms to respond before the Bank moves to final rules. The Bank said supervision would be shared with the FCA, the conduct regulator, an arrangement that is standard in UK financial regulation but that 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 means designated issuers have a defined runway rather than 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.

What Is Not Settled: Designation, Duration and the Number Itself

The statement does not name a coin. Designation as systemic is a separate determination, and until one is made the £40 billion figure binds 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.