A central bank does not usually publicly trash its own homework, but the Bank of England did exactly that on Monday.

The Bank spent the better part of a year telling everyone that if you wanted to hold a sterling stablecoin, you would be capped at 20,000 pounds per individual. Businesses got their own 10 million pound ceiling. The reasoning was that if too many deposits flowed out of high street banks and into digital tokens, the lending plumbing that keeps mortgages and overdrafts cheap could spring a leak. That was the official line in the November 2025 consultation, and the industry hated every word of it. Coinbase, Circle, and every UK-based fintech with a stablecoin ambition spent the last six months explaining, loudly, that those caps would push the entire business overseas before it even launched.

On Monday morning, the Bank scrapped the whole concept of personal holding caps. Everyday users and large businesses will no longer face restrictions on how much, how often, or what type of sterling stablecoin they can move. Deputy Governor Sarah Breeden, who has spent the last few months telegraphing this change in interviews and committee appearances, was unusually blunt about why: the original plan was "excessively conservative" and "cumbersome operationally for a temporary measure." When the regulator writing your rulebook publicly calls its own draft cumbersome, the rewrite is just a matter of time. The interesting question is what was supposed to replace the caps, and the answer is more clever than expected.

What replaces the 20,000 pound personal cap

Instead of policing how much retail wallets can hold, the Bank is putting a ceiling on the issuers themselves. Each systemic sterling stablecoin will be allowed up to 40 billion pounds in total circulation, a temporary guardrail the Bank says it will phase out as the market matures. That figure works out to roughly 50 billion dollars at current rates, and it applies per coin rather than across the whole market. So if three different issuers wanted to compete, each could grow to that ceiling without crowding the others out. The Bank also softened the reserve rules, letting issuers park up to 70 percent of backing assets in short-term UK government debt rather than the original 60 percent, with the rest sitting at the central bank. Interest payments to coin holders remain banned, which keeps these tokens from looking too much like savings accounts in disguise.

Why the Bank backed down

Six months of relentless industry pushback and a sharp House of Lords committee report did most of the work. Coinbase's head of policy for Europe, Katie Harries, told reporters that "a cap on stablecoin holdings is a cap on innovation, with real and significant risks for UK competitiveness." Issuers warned they would not bother with the UK market if every retail user had to be screened against an arbitrary holding ceiling, especially when the EU, Singapore, and Hong Kong are all moving toward friendlier frameworks. The threat of London quietly ceding the next decade of fintech building to other capitals seems to have landed at Threadneedle Street. Harries did add that aggregate issuance caps are still unusual globally, and that no other major jurisdiction has made them a baseline requirement, so the new framework is not exactly a victory lap for the industry either.

What this means for users and the next 12 months

The consultation on the new framework is open until 22 September 2026, with the final Code of Practice expected by year end and operational UK-regulated stablecoins targeted for 2027. For UK readers, the practical takeaway is straightforward: if a sterling stablecoin from a regulated issuer launches next year, you will not be told you have hit a personal limit at 20,000 pounds. For the broader industry, this is one of those rare cases where a major central bank publicly walks a position back because the market and lawmakers refused to play along. The Bank still gets its safety mechanism through the issuer-level cap, just without the heavy-handed retail version that nobody wanted to police. Whether 40 billion pounds per coin proves generous or stifling depends on how quickly demand actually shows up, but for now the regulator has chosen to let the market exist rather than fence it off.