A year ago the Bank of England wanted to stop British savers from holding more than 20,000 pounds of stablecoins each, a limit tight enough that payment firms said the coins would be useless for real business. This week the government moved to hand that same central bank a legal duty to help the technology grow. HM Treasury said it will write a new secondary objective on payments and digital money innovation into the Financial Services and Markets Bill, with the amendment due before the House of Lords on September 7 and 9.
City Minister Lucy Rigby framed the change as a growth measure, saying tokenisation and distributed ledgers could reshape financial markets and the Bank should keep pace. Deputy Governor Sarah Breeden backed it. The wording carries more than the endorsements do: this is a secondary objective, so it sits under the Bank's primary job of guarding financial stability and can be overruled by it whenever the two collide.
The cap the Bank proposed, then walked back
The turn reads sharper next to what the Bank spent two years drafting. Its proposed rulebook would have capped individual stablecoin holdings at 20,000 pounds and business holdings at 10 million pounds per coin. Industry pushback was blunt. No firm could run settlement at scale while policing every account balance against a ceiling, they argued, and a sterling stablecoin built under those limits would struggle against the dollar tokens already moving billions a day.
In June the Bank dropped the individual caps. It swapped them for a temporary ceiling of 40 billion pounds on how much any single systemic sterling stablecoin can issue, and cut the reserves that issuers must park in non-interest-bearing central bank accounts to at least 30 percent. The table tracks what changed.
| Rule | Earlier proposal | Current framework |
|---|---|---|
| Individual holding cap | 20,000 pounds per person | Removed |
| Business holding cap | 10 million pounds per coin | Removed |
| Issuance limit | None set | 40 billion pounds per systemic coin, temporary |
| Reserves at the central bank | Larger unremunerated share | At least 30 percent, non-interest-bearing |
| Bank of England's posture | Gatekeeper on holdings | Secondary duty to support innovation |
A mandate on paper, not a green light
Britain has run this play before. In 2023 Parliament handed the Financial Conduct Authority a secondary objective on competitiveness and growth, and two years on the industry still argues about whether the regulator behaved any differently. A duty to have regard to innovation is not a duty to approve anyone who applies. The one hard hook attached to the new objective is a yearly report to Parliament on what the Bank did with it.
Other countries drew their lines first
Rivals moved earlier and set firmer terms. The European Union's MiCA regime cleared hundreds of licensed firms and pushed unlicensed issuers out, and Japan's stablecoin framework wrote bank-style backing rules from the start. On the euro side, France has been backing its own euro stablecoin push.
The timeline is the part the headlines skip. Applications from firms that want to run a systemic sterling stablecoin are not expected to open until the end of 2026, and the 40 billion pound ceiling is written as temporary. So the reversal is real in law and still untested in practice. What a UK stablecoin issuer can build under it gets decided next year, not this one.
