UK Softens Stablecoin Rules While Imposing Growth Ceiling

The Bank of England has abandoned its controversial £20,000 individual and £10 million corporate holding limits for sterling stablecoins, replacing them with a single £40 billion issuance cap per systemic stablecoin. Reserve requirements were also loosened, allowing issuers to generate yield on backing assets.

This regulatory shift places the UK in a unique position among major economies. Unlike the US and EU—which regulate stablecoins heavily without imposing hard growth limits—Britain becomes the first jurisdiction to cap denominated token expansion, albeit with a "temporary" designation and review promise.

Sterling stablecoins currently represent just 0.5% of the $315 billion global market. The true test lies not in regulatory compliance, but whether pound-denominated tokens can achieve sufficient scale to challenge dollar-dominated crypto liquidity networks.