UK’s Bank of England Proposes £20,000 Cap on Individual Stablecoin Holdings Amid Regulatory Push

The Bank of England (BoE) has initiated a consultation proposing that individuals be capped at owning up to £20,000 worth of sterling-denominated stablecoins under its planned regulatory regime for “systemic” digital assets. The measure, which forms part of a broader framework announced by the BoE on November 10 2025, also envisages a £10 million cap for business holdings, with exemptions possible for large firms. 

Deputy Governor Sarah Breeden explained that the holding limits would apply temporarily “until the transition no longer poses risks to the provision of finance to the real economy.”  This new class of regulation targets stablecoins used for payments and settlements, rather than those deployed primarily as trading or investment tools. 

Why the cap is being proposed

The BoE’s rationale for introducing the cap rests on concern that large-scale movements of deposits into privately issued stablecoins could threaten credit availability and the banking system’s ability to provide loans. In the UK context, where around 85 % of retail credit comes from commercial banks, rapid deposit shifts into non-bank money forms are viewed as a potential risk.

By limiting how much individuals and businesses can hold in stablecoins, the BoE aims to reduce the chance of sudden outflows from bank deposits to stable digital money, which could undermine banks’ liquidity and hamper lending.

 The consultation paper sets out that stablecoin issuers deemed “systemic” would fall under BoE oversight, whereas smaller issuers would remain within the remit of the Financial Conduct Authority (FCA). 

Key features of the proposed regime

• A temporary individual holding cap of £20,000 for systemic stablecoins; for businesses the proposed limit is £10 million (with an exemptions regime for very large firms).
  
  

• Issuers of these stablecoins must back their assets with definitions that include: up to 60% in UK short-term government debt, and at least 40% deposited at the Bank of England, with higher thresholds (up to 95%) for issuers transitioning from FCA to BoE supervision. 
  
  

• The regime is currently in consultation, open until February 10 2026, before further steps toward implementation. 

Implications for consumers and businesses

For individuals holding or planning to hold stablecoins in the UK, the proposed cap means holdings above £20,000 in eligible stablecoins would need to be divested, moved to non-systemic tokens or structured differently.

For businesses reliant on stablecoins for payments, treasury operations or cross-border transfers, the £10 million threshold may require operational reviews and compliance adjustments.

Some within the crypto-industry have voiced concerns that the cap sends a negative signal for innovation and may place the UK at a competitive disadvantage compared with jurisdictions that do not impose such limits. Meanwhile, the BoE emphasises that the sum is temporary and reflects a bridging measure during the transition to a stablecoin regime designed to protect wider financial stability.

What to watch next

Key indicators include how the industry responds to the consultation, whether other jurisdictions follow this model, and how firms redesign their stablecoin-related services. Investors and payment-service providers must monitor how the BoE finalises the threshold, any exemptions regime, and how the FCA and BoE coordinate on the regime’s launch.

FAQs

Q1: What is the proposed stablecoin holding cap by the Bank of England?
The BoE is consulting on a cap of £20,000 for individuals holding systemic sterling-denominated stablecoins, and £10 million for businesses, as part of the transition to its stablecoin regulatory regime. 

Q2: Why is the Bank of England introducing this limit?
The limit aims to mitigate the risk that bank depositors shift large amounts into stablecoins, which could weaken the banking system’s ability to lend and provide credit. The UK’s reliance on bank credit makes this a particular concern for financial stability. 

Q3: Are these caps permanent?
No. The BoE describes them as temporary transitional measures, to be removed when officials judge that the risk to the real economy from stablecoin adoption has sufficiently diminished. 

Q4: Which stablecoins and holdings will the cap apply to?
It will apply to “systemic” sterling-denominated stablecoins those deemed by HM Treasury to have the potential to threaten financial stability. Others outside that definition remain under the FCA’s remit. 

Q5: What effect might this have on the UK crypto industry?
Critics warn it could hamper innovation, divert business to more permissive jurisdictions and raise compliance costs for firms. Supporters argue it strengthens confidence in stablecoins and safeguards the financial system. 

Q6: When will this regime become law?
The consultation is open until 10 February 2026. Following feedback, the BoE plans to publish detailed codes of practice later in 2026, meaning full regulatory rules could roll out thereafter.