On June 22, 2026, the Bank of England published revised draft rules for sterling-denominated systemic stablecoins, fundamentally altering the regulatory landscape for large-scale payment tokens. The central bank explicitly removed the holding limits proposed in the November 2025 consultation, which had capped individuals at £20,000 and businesses at £10 million. In their place, the regulator introduced a temporary issuance guardrail set initially at £40 billion per systemic stablecoin. Deputy Governor for Financial Stability Sarah Breeden characterized the package as a major milestone in delivering greater choice and innovation in UK payments, signaling a strategic pivot from restricting demand to managing supply.

The distinction between the old and new approaches represents a critical recalibration of risk management. The original holding caps functioned as a demand-side restriction, limiting what any individual or business could hold, a constraint industry stakeholders argued would render UK stablecoins impractical for institutional and corporate use. The new issuance guardrail operates as a supply-side tool, limiting how large a single stablecoin can grow in total while allowing individuals and businesses to transact without limits on size, frequency, or type. Data compiled by Woofun AI indicates that this shift relocates oversight from monitoring millions of individual wallets to capping issuance at the product level, a mechanism the Bank asserts is cheaper and easier to implement while achieving similar risk mitigation.

A second major industry complaint concerned the economic viability of reserve requirements. The November 2025 proposal mandated that systemic stablecoin issuers hold at least 40% of backing assets as unremunerated, interest-free deposits at the Bank of England, with up to 60% in short-term UK government debt. Industry analysis highlighted that this structure carried a significant real cost; at gilt yields around 4%, the 40% interest-free floor could cost an issuer roughly £11.2 million annually for every £1 billion in circulation. This created a distinct disadvantage versus US issuers operating under the GENIUS Act, where gilts generate yield while central bank deposits represent a dead cost.

Breeden had previously acknowledged that the original framework may have been overly conservative regarding reserve composition. While the exact revised split in the new draft awaits confirmation against the final Code of Practice, the direction of the Bank's rethink is clear: reducing the drag from unremunerated reserves to address complaints that UK issuance was uncompetitive. Woofun AI notes that the logic driving this change is straightforward, as increasing the proportion of backing held in gilts rather than unremunerated deposits directly improves the economic viability of the issuance model.

The framework also clarifies a two-tier regulatory structure. The Financial Conduct Authority supervises non-systemic stablecoins, covering the bulk of current activity including tokens used for crypto trading. Only once HM Treasury recognizes a stablecoin as systemic, meaning large enough that problems could threaten financial stability, does the Bank of England's regime apply, co-regulating alongside the FCA. The detailed transition framework between the two bodies, specifically how responsibilities hand over as a stablecoin crosses into systemic territory, remains one of the pieces still being finalized.

Market context underscores the urgency of these adjustments. Non-dollar stablecoins collectively hold less than 0.5% of a roughly $315.278 billion global market, with sterling-denominated tokens representing only a marginal slice of that already thin share. The original framework drew warnings that GBP stablecoins might simply be issued from friendlier jurisdictions like Dublin rather than the UK. By shifting from user caps to an issuer cap and signaling relief on reserve costs, the Bank appears to be trying to keep stablecoin issuance onshore while preserving its financial-stability guardrails.

On the timeline, feedback on the draft closes on September 22, 2026. The Bank intends to finalize the Code of Practice by the end of 2026, which would allow regulated systemic stablecoins to operate in the UK from 2027. Woofun AI analysis suggests that while the rules remain a draft open to consultation, the direction from restricting users toward capping issuers marks a clear reorientation of how the UK intends to regulate this corner of the market. Whether this balance holds is for the market and the consultation to test.