BoE proposes £20k individual limit on pound stablecoins
On November 10, the Bank of England launched a consultation on its stablecoin regulation. It proposes temporary holding limits for pound stablecoins: £20,000 per individual and £10 million per business, with exemptions for crypto trading platforms and large merchants. The draft rules require issuers to back 60% of assets with short-term UK government bonds and hold 40% as unremunerated BoE reserves. Non-systemic stablecoins used in crypto trading will fall under FCA supervision. The consultation runs until February 10, 2026, with final regulations expected by late 2026. Governor Andrew Bailey and Deputy Governor Sarah Breeden signalled a shift towards recognising stablecoins as legitimate payment tools. This stablecoin regulation aims to safeguard financial stability during the digital transition. Traders should note how limits on pound stablecoins could impact liquidity and market stability.
Neutral
While the BoE’s temporary limits on pound stablecoins may reduce short-term liquidity for traders, they do not threaten the peg or fundamental stability of these tokens. The backing requirements with UK government bonds and BoE reserves strengthen redemption safeguards, supporting market confidence. Exemptions for large entities mitigate disruptions in payments and trading. Overall, the measures aim to ensure financial stability without altering the stablecoin’s price dynamics, suggesting a neutral impact on pound stablecoins.