BoE Drops Stablecoin Holding Limits, Easing Path to GBP Liquidity Pools

The Bank of England has softened its stablecoin framework by dropping individual holding limits and replacing them with a temporary £40 billion aggregate issuance cap for systemic stablecoins. The move reduces operational friction for brokers, exchanges, and liquidity providers, making GBP-backed stablecoins more practical for large balances, settlement, and collateral use. The BoE also eased reserve rules, lowering the share of backing assets required in non-interest-bearing central bank deposits from 40% to 30%, which improves issuer economics. While the changes support innovation and potential liquidity pools in pound-denominated digital assets, key uncertainties remain around how long the cap will last and whether stablecoins will be permitted for settlement in core wholesale markets. The framework still keeps strong constraints on bank-issued stablecoins, suggesting non-bank issuers and fintechs may have a relative advantage in the near term.