UK stablecoin rules ease limits; Hyperliquid and Base attract flows as ETH sheds value
The Bank of England revised its UK stablecoin framework on June 22, after industry feedback. The UK stablecoin update removes the earlier planned £20,000 personal wallet limit and avoids complex per-wallet caps for businesses.
Instead, systemic sterling-denominated stablecoins face a launch issuance guardrail of £40 billion. Issuers may back tokens with up to 70% short-term UK government debt, while the Bank will still cover redemption, safeguarding, liquidity, operational standards, and settlement resilience. Draft feedback closes September 22, 2026, with final Code of Practice expected by end-2026, targeting regulated stablecoin operation in the UK from 2027.
Separately, 3-month net flow data points to capital rotation. Hyperliquid and Base led inflows, while Ethereum mainnet recorded the largest outflows during the same period. The article frames this as ongoing activity shifting toward lower-cost, higher-throughput networks, leaving ETH mainnet facing stronger competition even if Ethereum remains central to DeFi and settlement.
For traders, the UK stablecoin policy shift may improve regulated access and liquidity conditions in the UK market from 2027, but near-term attention looks more focused on which chains capture trading demand right now—potentially reinforcing relative strength for L2s/high-volume venues versus Ethereum mainnet.
Neutral
The UK stablecoin framework change is a mix of supportive regulation and a clear near-term “flow rotation” signal. On the bullish side, easing the proposed £20,000 personal wallet cap and shifting to a systemic £40B issuance guardrail can reduce friction for regulated stablecoin adoption in the UK and improve medium-term liquidity expectations heading into the 2027 rollout.
However, the article’s flow data shows capital moving away from Ethereum mainnet toward Hyperliquid and Base over the last three months. That is typically consistent with periods when traders favor faster, lower-fee execution and liquidity concentration on L2s/high-throughput chains—often pressuring ETH mainnet activity even if ETH remains the settlement backbone. In the short term, this could mean weaker relative performance for ETH versus L2s/other venues, with market attention split between regulatory timelines (2026/2027) and where real trading volumes are accruing.
Longer term, once UK stablecoin access becomes clearer, benefits may broaden across regulated issuers and trading ecosystems. But until chain-level demand stabilizes, traders may keep rotating based on fees, throughput, and liquidity depth rather than on policy headlines alone—hence an overall neutral expected market impact.