UK to Cap £20K on Individual Stablecoin Holdings & £10M for Businesses? Proposes Bank

The Bank of England has proposed strict holding limits for widely used stablecoins: £20,000 for retail users and £10 million for businesses. The move forms part of a wider consultation the BoE opened as it designs a regulatory regime for systemic sterling stablecoins. Bank officials say the caps aim to shield the UK banking system and households from sudden outflows.

The rules in brief

Under the BoE’s proposals, stablecoins that are classed as systemic and used for payments would face both holding caps and tougher backing requirements. Issuers may need to place a portion of reserves in central bank accounts while keeping the rest in short-term government debt. Regulators also flagged a temporary transition regime for existing issuers moving from Financial Conduct Authority oversight.

Why the limits?

BoE officials link the limits to the structure of the UK’s mortgage and banking system. They worry a fast shift of deposits into stablecoins could drain bank funding and tighten credit for households and firms. The caps are framed as a short-term safety measure while the new regime beds in. Deputy Governor comments and BoE briefings underline that these steps are about financial stability, not a ban on stablecoins.

What would issuers need to do?

Beyond caps, the BoE wants issuers to hold high-quality, liquid assets as backing. The proposals would allow a sizeable share of reserves in short-term sovereign debt, with the remainder in central bank deposits or similar safe holdings. The aim is to ensure redemption promises remain credible in market stress and to give regulators tools to manage a failing issuer.

How does this compare globally?

Other regulators are also moving on stablecoins, but the UK’s cap proposal is unusual. Some jurisdictions focus on reserve rules or operational standards without imposing strict per-user holding limits. The BoE says the UK’s banking model warrants a different approach, but critics argue this may leave the UK less competitive for crypto payments and stablecoin businesses.

To give a clearer view of how the process unfolds, the Bank of England has also shared a timeline outlining the consultation and rulemaking phases for sterling-denominated stablecoins. The consultation paper is scheduled for publication on 10 November 2025, with responses due by 10 February 2026. A final rules instrument and supervisory framework are expected in the second half of 2026.

Source: Bank of England

As regulators tighten control over stablecoins, the DeFi space continues to evolve with automation tools like AI agents for yield farming, reshaping how investors earn passive income. Read our in-depth piece on AI Agents for Automated Yield Farming here.

What happens next?

The BoE’s consultation is open to responses through the stated deadline. Regulators will collect feedback and revise the draft before finalizing rules, expected next year. Market participants now face a window to the lobby, adapt business models, or plan relocations depending on the final text.

Bottom line

The Bank of England wants stablecoins to exist, but only under tight guard. The proposed £20,000 retail cap and £10 million business cap show how cautious the BoE is about risks to the wider financial system. How the UK balances safety with innovation will shape where stablecoin activity flows next.

Disclaimer

This article summarizes public proposals and reporting from major outlets. It is for informational purposes only and does not constitute financial or legal advice. Check the Bank of England consultation documents and official releases for the definitive text. 

Get the news in a Jist. Follow Cryptojist on X and Telegram for real-time updates!