Key facts
- The Bank of England has scrapped proposed holding limits for stablecoins.
- A £40 billion issuance cap has been set for stablecoins.
- Issuers can hold 70% of reserves in government debt.
- The remaining reserves must be held in central bank deposits.
The Bank of England has announced a significant revision to its proposed regulations for stablecoins, abandoning plans for holding limits. Instead, the central bank has established a £40 billion cap on the total issuance of stablecoins. This new framework allows stablecoin issuers to maintain up to 70% of their reserves in government debt. The remaining 30% of reserves must be held in deposits with the central bank. This regulatory approach aims to balance innovation in digital currencies with financial stability concerns. The decision reflects a considered approach to integrating stablecoins into the existing financial system while managing potential risks associated with their growth and stability. The £40 billion cap is intended to provide a controlled environment for the development of the stablecoin market in the UK.