Bank of England Drops Holding Caps, Caps Issuance Instead: The New GBP Stablecoin Rules

On June 22 the Bank of England issued draft rules for sterling stablecoins. It scrapped the £20,000 individual and £10M business holding caps, replacing them with a temporary £40B (~$53B) issuance ceiling per systemic product. Issuers can now earn yield on up to 70% of reserves. For payments and fintech founders, the rulebook now splits by currency.

What Happened

The Bank of England published a policy statement and draft Code of Practice on June 22, a sharp retreat from its November proposal. Three things matter. First, it scrapped the holding caps it had planned — £20,000 per individual and £10 million per business — entirely. Second, in their place it set a £40 billion issuance ceiling per systemic sterling stablecoin product, roughly $50.6 billion (CoinDesk cites $50B, CryptoSlate ~$53B). That is an issuer-level cap, not a wallet-level one. Third, the reserve mix moved in issuers’ favor: up to 70% can sit in interest-bearing short-term UK government debt — T-bills under six months — while the remaining 30% stays in non-interest-bearing central bank deposits. Paying interest directly to holders is still banned, but activity-based rewards like cash-back and loyalty points are allowed. The reversal was driven by industry pushback and a House of Lords committee; the Bank itself wrote that it had “acknowledged the issues raised and reviewed the analysis supporting the calibration.” The £40B ceiling is temporary, set to be phased out as the market matures. Consultation runs to September 22, the code is to be finalized by year-end, and UK-regulated stablecoins are targeted to go live in 2027.

What This Means for Founders

This is not just a deregulation headline. It is a signal that the rulebook now diverges by currency. Dollar stablecoins run under the U.S. GENIUS Act framework; sterling now runs under the Bank of England’s issuance ceiling and reserve rules. Even when both are called “stablecoins,” the denomination dictates entirely different issuance structures, revenue models, and barriers to entry. Two design choices deserve close study. One, using an issuer-level cap instead of per-holder limits — a compromise that contains systemic risk without wrecking the user experience, which is why the industry pushed for it. Two, letting issuers keep yield on 70% of reserves while barring direct interest to holders — meaning the issuer’s revenue model is now defined by regulation, not by product choice. For a payments, remittance, or fintech founder, the currency and jurisdiction you build your rail on now determines your business model, because the rules differ per currency. A sterling rail and a dollar rail are no longer interchangeable plumbing; they are two regulatory regimes with different economics baked in.

What You Can Do Now

First, be explicit about which currency’s stablecoin your product depends on. Dollar, sterling, euro now sit in separate regulatory universes, and that gap divides reserve management, revenue split, and issuance caps. Second, redesign your revenue model inside the rules. The UK letting issuers keep reserve yield is a signal it wants the issuance business to survive — so model how you acquire users with cash-back and rewards when you can’t pay holders interest directly. Third, treat the issuer-cap-versus-holder-cap question as a live variable; the U.S., UK, EU, and Asia are calibrating differently, so build a design that survives either. Fourth, don’t bind your payment rail to a single denomination. As jurisdictions fork, an architecture that abstracts across multiple-currency stablecoins and swaps issuers is what separates the rails that last from the ones that get stranded by one regulator’s move.