Bank of England eases crypto rules
Key Points
- Bank of England eased proposed rules for systemic sterling stablecoins after industry feedback.
- Backing asset split revised from 60/40 to 70/30, raising the share held in government debt.
- Proposed £20,000 individual and £10m business holding limits scrapped.
- Each systemic stablecoin capped at an initial £40 billion under a temporary issuance guardrail.
- Coinholders not covered by FSCS and could receive less than full value in a failure.
The Bank of England has eased its proposed rules for sterling-denominated systemic stablecoins after industry warned the original plans threatened commercial viability.
In a publication setting out its final policy positions, the Bank confirmed it would raise the share of backing assets that stablecoin issuers can hold in interest-earning government debt, abandon proposed limits on how much individuals and businesses can hold, and permit a wider set of liquidity operations.
The changes follow feedback to the Bank’s November 2025 consultation, which drew substantive responses on backing asset composition and holding limits.
Backing assets shifted to 70/30 split
The Bank had originally proposed that issuers hold at least 40% of backing assets as unremunerated deposits at the Bank of England, with up to 60% in short-term UK government debt securities.
The majority of respondents argued the 40% deposit requirement was too conservative, affecting business model viability and the competitiveness of the UK regime, with calls for a higher share of interest-bearing assets.
The Bank has now lowered the central bank deposit requirement to 30%, allowing issuers to hold up to 70% of backing assets in short-term UK government debt with a residual maturity of up to six months.
The Bank said this brings the framework more closely into line with historical liquidity stress events while continuing to provide a credible liquidity anchor.
Deposits held at the Bank will remain unremunerated, on the basis that stablecoins are intended as a payments instrument rather than a store of value. Commercial bank deposits and a broader set of eligible assets will not be permitted, which the Bank attributed to financial, operational and contagion risks.
Holding limits dropped for £40 billion issuance cap
The Bank scrapped its proposed per-coin holding limits of £20,000 for individuals and £10 million for businesses, citing significant operational concerns raised by respondents and the costs of implementing a tool intended to be temporary.
Individuals and businesses will instead be able to use systemic stablecoins without limits on the size, frequency or type of transaction.
In place of holding limits, the Bank will introduce a temporary issuance guardrail capping each systemic stablecoin at an initial maximum of £40 billion.
The Bank said the guardrail was calibrated using the same analytical framework as the holding limits and is expected to deliver a broadly equivalent level of risk mitigation to credit provision.
The guardrail will be reviewed regularly and removed once the Bank is satisfied that the risk to credit provision has been effectively mitigated.
Liquidity backstop and 24-hour redemptions
The Bank confirmed it intends to introduce a Central Bank Liquidity Facility allowing eligible, solvent and viable issuers to borrow against short-term sterling-denominated UK government debt in exceptional circumstances.
Issuers will also be permitted to undertake overnight repo and reverse repo transactions using qualifying government debt securities.
Systemic issuers will be required to process redemption requests as soon as practicable and no later than within 24 hours of receipt of a full redemption request.
The Bank will not permit issuers to suspend redemptions for any reason. Issuers remain barred from paying interest to coinholders, though activity-based rewards linked to using a stablecoin for payments will be allowed.
The Bank confirmed that coinholders’ claims will not be insured under the Financial Services Compensation Scheme. If backing assets and reserves prove insufficient, coinholders could receive less than 100 pence in the pound.
Systemic stablecoins, those widely used in payments that may pose risks to UK financial stability, will be regulated jointly by the Bank and the Financial Conduct Authority once recognised by HM Treasury.
The consultation on the draft Code of Practice closes on 22 September 2026, with the Bank intending to finalise the rules by the end of 2026.
