The Bank of England (BoE) has just announced a new set of rules for British pound-pegged stablecoins, marking a significant shift from a rigid stance to a more open approach. Instead of imposing individual holding limits as previously proposed, the BoE decided to switch to a temporary total supply cap of 40 billion pounds (approximately $52.9 billion) for each systemic stablecoin. This is seen as a major concession by regulators following intense pressure from the fintech and crypto industries, aiming to avoid suffocating the domestic stablecoin market right from its infancy stage.
A notable point in the new framework is that the BoE relaxed the backing asset requirements, allowing issuers to invest up to 70% of reserves in short-term UK government bonds, up 10% from the late 2025 proposal. The remaining 30% must be held as non-interest-bearing deposits directly at the BoE. The new rules also tighten safety infrastructure by requiring reserve assets to be placed in independent trust structures, while all redemption requests into fiat currency must be processed within a maximum of 24 hours to optimize liquidity and protect holders.
However, the BoE maintains its ban on issuers paying interest directly to stablecoin holders to protect the traditional banking system, though reward programs and payment incentives remain permitted. These stringent requirements have sparked mixed reactions from experts at some large trading platforms, who argue that the $52.9 billion cap could make the UK the only major economy to self-limit the scale of its own digital currency. This cautious approach pushes London into a tight race against Europe's MiCA framework and federal legislative developments in the United States.
The BoE will continue to gather public feedback until September 22 before finalizing the rules by the end of 2026. If this timeline goes smoothly, the first systemic British pound stablecoins will operate fully under the new framework by 2027. Will this regulatory adjustment be enough to retain major digital asset firms in London, or will it continue to drive them to more welcoming jurisdictions?
Please do your own research carefully before making any transactions (DYOR). $BTC $AIGENSYN $SYN #Colecolen
