London Softens Its Stablecoin Guardrail

The Bank of England published on June 22, 2026 its policy statement and draft Code of Practice for sterling-denominated systemic stablecoins. The clearest change is the new volume guardrail. Instead of the per-holder limits proposed in 2025, £20,000 for individuals and £10 million for businesses, the central bank now plans to use a temporary issuance cap for each systemic stablecoin, initially set at £40 billion.

That shift matters because it turns a highly operational constraint, monitoring every coinholder balance, into a macroprudential tool that is easier to administer. The Bank says consultation feedback raised significant concerns about the complexity of holding limits and the risk that strict sterling rules could push activity toward non-sterling stablecoins. The softer mechanism does not remove the safety logic. The issuance guardrail will be reviewed regularly and removed only once the Bank is satisfied that risks to bank credit provision have been effectively mitigated.

The second notable change concerns reserve assets. The steady-state backing mix moves to 70/30: 70% short-term UK government debt and 30% unremunerated deposits at the Bank of England. Issuers deemed systemic at launch may hold up to 95% of their backing assets in UK government debt while they scale. This is not a light-touch regime. The affected stablecoins must still support redemption at par, use high-quality backing assets, meet capital and continuity requirements, and are expected to access payment systems directly rather than through a sponsor.

That direct access point is technical but consequential. A systemic issuer would not simply attach a token to a payment app. It would need to settle in central bank money, reduce reliance on intermediaries and maintain credible redemption procedures under stress. In practice, the stablecoin becomes less of a standalone crypto product and more of a payment infrastructure component, subject to liquidity, governance and continuity expectations closer to those applied to critical market operators.

The timetable is also now clearer. The Bank intends to finalise the Code of Practice by the end of 2026, then consult in 2027 on supporting material, including updates to its rules for recognised payment systems and the design of a central bank liquidity facility for eligible issuers. For blockchain infrastructure builders, the signal is precise: the UK is making sterling stablecoins more viable than the first consultation suggested, but only for issuers willing to operate like critical payment infrastructure. That makes compliance architecture part of the product, not an afterthought for later licensing.