The Bank of England opened a consultation on 10 November 2025 proposing temporary limits on pound‑denominated stablecoin holdings. The proposal sets caps of up to £20.000 for individuals and £10.000.000 for businesses, and will not be implemented before 2026. The measure seeks to preserve the stability of the British banking system and affects retail users, corporate treasuries and systemic stablecoin issuers.
The Bank of England’s proposal prioritizes protection of the UK mortgage market, which depends largely on commercial bank financing, according to the regulator’s spokesperson. This focus aims to limit potential shocks from large shifts into stablecoins that could impact bank funding.
For issuers categorized as systemic, the text sets conservative reserve requirements, with a maximum of 60% in short‑term UK government debt and 40% in non‑interest‑bearing deposits at the Bank of England; in a transitional phase up to 95% in government bonds would be allowed. These rules create a prescriptive framework on reserve composition and user exposure.
The U.S. takes a different path under the GENIUS Act, signed on 18 July 2025, which establishes a federal framework for dollar stablecoins without imposing ownership caps on individuals or companies. The law requires 1:1 backing with reserves in cash or U.S. Treasury bonds with maturities of 90 days or less, mandates monthly disclosures of reserve composition, and foresees detailed rulemaking in early 2027 with full compliance by mid‑2028.
Industry voices warn of negative effects from caps on holdings. Tom Duff Gordon, vice president of international policy at Coinbase, cautioned: “imposing caps on stablecoins is bad for UK savers, bad for the City and bad for sterling”, reflecting concerns about potential capital flight and operational costs.
The functions of the Bank of England’s stablecoin proposal
The British proposal may reduce domestic retail adoption and increase compliance complexity for issuers and custodians, with direct effects on the liquidity of local markets as users and platforms adjust to caps and reserve rules.
For corporate treasuries, limits and reserve composition could raise the cost of accessing tokenized means of payment and may favor jurisdictions with less restrictive frameworks, influencing treasury location and payment routing decisions.
On the risk front, non‑interest‑bearing deposits at the central bank introduce counterparty concentration and opportunity costs for issuers, potentially affecting their profitability and the design of their reserve strategies during the transitional and steady‑state phases.
The regulatory timetable places UK implementation from 2026, while the U.S. regime points to a staggered phase between 2027 and 2028. These milestones will be key for traders, treasuries and issuers as they adjust liquidity, custody and compliance.
