Bank of England Proposes £20,000 Cap on Retail Stablecoin Holdings

The Bank of England has issued a consultation paper proposing a regulatory framework for stablecoins, suggesting a £20,000 limit for individual retail holders and a £10 million cap for businesses. This measure aims to prevent sudden outflows from traditional deposits as the adoption of stablecoins increases. The proposed limits will remain until risks to financial stability decline. The consultation emphasizes that the caps will not affect stablecoins used for non-systemic purposes, such as trading cryptoassets. The bank also outlined requirements for issuers to maintain their reserves, including holding up to 60% in short-term UK government debt, with the remainder in unremunerated deposits. It recognizes the need to support liquidity for recognized issuers during redemption requests and is committed to advancing the regulatory framework alongside international peers. The consultation will conclude on February 10, 2026, after which rules will be finalized for implementation.

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