Bank of England stablecoin rules: GBP issuance cap £40B and reserve mix

The Bank of England stablecoin rules (policy statement and draft Code of Practice) revise the UK framework for systemic GBP stablecoins. The biggest change is the removal of proposed individual and business holding caps. Instead, the Bank of England sets a temporary issuance limit of £40B (about $53B) per systemic GBP stablecoin product to contain financial-stability risk. Key GBP stablecoin rules for traders to watch: - No individual or business holding limits, aimed at improving real-world payments and usability. - Asset backing: up to 70% of reserves can be short-term interest-bearing UK government debt, with the remaining 30% held as non-interest-bearing deposits at the Bank of England. - Timeline: the consultation closes Sept. 22, 2026, with a final Code of Practice expected by year-end; regulated GBP stablecoins are planned for 2027. Market impact angle from the article: the £40B GBP issuance cap is far smaller than major dollar stablecoins (USDT ~$186B, USDC ~$74B). If demand rises faster than the capped supply, secondary-market trading could trade above par, creating a scarcity premium rather than a typical peg-down risk. For crypto traders, this means GBP stablecoins may become more usable for UK payments and sandbox trials, but near-term growth is structurally constrained versus USDT/USDC. Watch for liquidity and pricing divergence if issuance demand outpaces the cap.