The Bank's stablecoin rulebook: a £40bn ceiling and a credible path to scale

The Bank of England has put a number on the UK's systemic stablecoin regime. Each systemic issuer will face an initial issuance guardrail of £40 billion, and may hold up to 70% of backing assets in short-term UK government debt, with the remainder in central bank deposits (Bank of England). Both figures are revisions from last year's consultation, which capped interest-bearing assets at 60% and floated temporary holding limits on individual users (Bank of England). The direction of travel is clear: the Bank wants viable economics for issuers without conceding ground on financial stability.

The shift from holding limits to an issuer-level guardrail is the more consequential of the two changes. Per-user caps would have forced retail-facing distribution to police balances customer by customer, an operational drag that would have deterred banks and large payments firms from entering. A single £40 billion ceiling, reviewed periodically and removable once credit-provision risks are addressed, pushes the constraint upstream to the issuer and leaves household and business usage unrestricted (Bank of England). For incumbents weighing whether to issue, partner or distribute, this is the difference between a product line and a compliance project.

The 70% backing allowance also reshapes the competitive question. Sarah Breeden, Deputy Governor for Financial Stability, framed the regime around "prompt redemption, strong protections and central bank support" (Bank of England). Translated into commercial terms: issuers get a yield-bearing book large enough to fund operations and a central bank backstop for redemption stress, but the unencumbered 30% deposit floor caps how aggressively any issuer can compete on rate-share or rebates. Boards considering entry should model the regime as a regulated narrow-bank analogue, not a free-floating money market product. Asset managers running short-dated gilt strategies should expect a new, sizeable and rules-bound buyer in that segment.

The sequencing matters for positioning. The Bank and the FCA are explicitly building an end-to-end regime with a managed transition as firms grow from non-systemic to systemic, with the FCA's final rules to follow shortly (Bank of England). Feedback on the draft Code closes on 22 September 2026, with the Bank intending to finalise it by year-end (Bank of England). That gives senior leaders a narrow consultation window to argue on two points that will define the economics for years: the level at which the £40 billion guardrail is reviewed, and the conditions under which it is lifted. Firms that wait for the final text will be price-takers on both.

The regime is now concrete enough to plan against. The strategic question for bank and payments-firm boards is no longer whether to have a stablecoin position, but whether to issue, distribute, or cede the rails.