💷 Bank of England Proposes £20K Stablecoin Limit — London Moves Toward Regulated Digital Money

The UK’s central bank unveils a cautious but groundbreaking framework for pound-backed stablecoins — balancing innovation with financial stability.

London just took a major step toward merging digital money with its traditional financial system — under tight guardrails. The Bank of England released a detailed consultation paper on November 10, outlining its proposed framework for sterling-backed stablecoins, setting the stage for what Deputy Governor Sarah Breeden called “a key step toward a full stablecoin regime in 2026.”

Under the plan, individuals will face a £20,000 holding cap per stablecoin issuer, while businesses can hold up to £10 million. These temporary limits are designed to prevent liquidity shocks during early adoption — ensuring that innovation doesn’t undermine the country’s banking stability.

🔎 Quick Facts

• 🏦 Holding limits: £20,000 per person, £10 million per business
• 💰 Reserves: 60% in short-term UK debt, 40% in Bank of England accounts
• 📅 Full stablecoin regime: Expected by 2026
• ⚖️ Oversight: Bank of England (systemic) + FCA (non-systemic)
• 🪙 Consultation ends: Feb 10, 2026

🏛️ The Proposal: Guardrails for the Digital Pound

The Bank of England’s blueprint defines the foundation for “systemic stablecoins” — digital tokens pegged to the pound that could one day power national payments.

According to the proposal:

• Issuers can hold up to 60% of reserves in short-term UK government debt.
• Systemic issuers (large or critical players) can go up to 95%.
• The remaining 40% must sit in non-interest-bearing Bank of England accounts to guarantee redemption liquidity even under stress.

“Our aim remains to support innovation while building public trust in this new form of money.” — Sarah Breeden, Deputy Governor for Financial Stability

💷 Why It Matters

This marks one of the most comprehensive stablecoin proposals by any G7 central bank — signaling that the UK wants to lead in the global race for regulated digital finance. By anchoring stablecoins to sovereign debt, the Bank ensures both trust and liquidity — while protecting credit flow to the real economy.

A temporary £20,000 limit per person is meant to slow down large-scale capital migration from traditional bank deposits into digital money. Once the central bank determines that “risks to real-economy credit provision” have eased, these caps may be lifted.

⚙️ Two Regulators, One Ecosystem

The framework splits responsibilities:

• 🔹 FCA — regulates non-systemic issuers and ensures consumer protection.
• 🔹 Bank of England — takes over once an issuer becomes “systemic.”

This dual model blends prudential oversight with market innovation, aiming to make the UK a safe but competitive hub for tokenized finance.

🌐 Toward Tokenized Finance

The Bank’s statement described the proposal as a step toward a hybrid future:

“This marks a crucial step in preparing for a future where new forms of digital money can be widely used alongside existing payment methods.” — Bank of England statement

By defining how stablecoins interact with traditional deposits, the UK becomes one of the first major economies to draw a clear legal line between retail stablecoins and conventional bank money.

Stablecoins used for wholesale settlement and the Digital Securities Sandbox run jointly by the Bank and FCA will be exempt from the temporary caps — supporting continued institutional experimentation.

🧭 What’s Next

The consultation remains open until February 10, 2026. Final Codes of Practice are expected later that year, establishing a full regulatory framework by 2026.

This move positions London at the crossroads of innovation and oversight — advancing digital currency adoption without compromising its hallmark financial stability.

✅ TL;DR

• 💷 Bank of England proposes £20K per-person stablecoin limit.
• 🏛️ 60% of reserves to be held in UK government debt.
• ⚖️ Dual regulation: Bank of England + FCA.
• 📅 Consultation open until Feb 10, 2026.
• 🌍 UK moves toward hybrid, regulated digital finance by 2026.

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