The UK softened stablecoin rules, but may still be capping its own market
The Bank of England has softened its stablecoin regime by dropping proposed wallet-level caps of £20,000 for individuals and £10 million for businesses. In their place, it set a £40 billion cap on the total size of any systemic sterling stablecoin in circulation, while easing reserve rules so issuers can hold more backing assets in short-dated UK government debt and less in non-interest-bearing deposits. This makes sterling stablecoins easier to use for larger payments, settlement, and collateral, and improves issuer economics by allowing more reserve income. But the framework still leaves the UK in a difficult competitive position: dollar stablecoins dominate global liquidity, and the pound token starts from a tiny base with a hard ceiling that rivals do not face. The Bank’s main concern remains deposit flight from banks, so the cap is intended as a temporary brake until risks to credit provision are better understood. The big unanswered question is demand, since UK payments are already fast and free.
