Bank of England Proposes Stablecoin Rules, Capping UK Retail at £20K and Business at £10M

The Bank of England is seeking public feedback on a proposed
framework for regulating stablecoins. The consultation paper, released today (Monday),
focuses on sterling-denominated “systemic stablecoins.”

Digital
assets meet tradfi in London at the fmls25

These are tokens the central bank said are
widely used for payments and may pose risks to financial stability. The BoE
has said that such stablecoins could undermine public confidence in money and
payments.

Stablecoin Issuers Face New BoE Limits

Under the proposal, stablecoin issuers would need to back at
least 40% of their liabilities with unremunerated deposits at the BoE. The
remaining 60% could be held in short-term UK government debt.

Systemically important issuers could initially hold up to
95% in government debt, with the level reduced to 60% as the stablecoin grows.

🇬🇧 JUST IN: The UK’s BOE proposes a £20K cap on individual stablecoin holdings and £10M for businesses. pic.twitter.com/85JXOrs5X5

— Cointelegraph (@Cointelegraph) November 10, 2025

Treasury, BoE Oversee Stablecoin Systemic Importance

The paper also sets limits on holdings. Individual users
could be restricted to 20,000 pounds per coin, while businesses could hold up
to 10 million pounds. Businesses may qualify for exemptions if higher balances
are needed for normal operations.

Tim Meggs, Co-Founder and CEO of LO: TECH said the proposals
have sparked “scorn and memes” online over the £20,000 stablecoin limit but
added that some institutional measures are “sensible.”

“£10 million limits for businesses, exclusions for some
wholesalers, and stipulations around the composition of issuers’ treasuries all
make sense,” Meggs said.

“However, the issue isn’t with how sensible the proposals
are; it’s with the fact that the regulator is so far behind,” he explained. “In a world where
the US put stablecoin legislation in place earlier this year, this should
already be law in the UK, not just consultation.”

Lord Vaizey, Co-Chair of the Crypto and Digital Assets APPG,
welcomed the Bank of England’s stablecoin proposals as “a significant step
towards providing the clarity and certainty investors need to set up and scale
up in the UK.”

He noted that while exemptions for large retailers and
intermediaries are “encouraging,” he remains concerned about caps on individual
and business holdings, adding that “the UK must strike the right balance by
creating a regime that is both safe and ambitious enough to secure the
country’s leadership in the future of digital money.”

His Majesty’s Treasury will determine which stablecoin
systems and providers are considered systemically important. Once designated,
these entities would be subject to the BoE’s rules and ongoing supervision.

The consultation period runs until February 10, 2026. The
central bank expects to finalize the regulatory framework in the second half of
the year.

Stablecoins Expected to Play UK Role

Earlier, The Bank of England emphasized that proposed
stablecoin holding and transaction limits are temporary. Deputy Governor
Sarah Breeden said the measures aim to maintain financial stability while
allowing stablecoins to play a role in the UK’s multi-currency payments system.

The central bank highlighted that rapid shifts from bank
deposits into stablecoins could destabilize credit for households and
businesses, noting that regulated stablecoins are likely to have a role in the
UK market over time.

This article was written by Tareq Sikder at www.financemagnates.com.
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