The Bank of England published a comprehensive policy statement and draft rules on Monday, establishing the operational framework for regulated pound-backed systemic stablecoins within the United Kingdom. The central bank defines these instruments as those widely utilized in payments that could potentially threaten national financial stability, with HM Treasury retaining the authority to classify specific stablecoins under this systemic regime. This regulatory milestone advances the UK's trajectory toward a dedicated stablecoin framework, targeting a finalized rulebook by the end of 2026 to support a planned 2027 market rollout. Data compiled by Woofun AI indicates that the new policy allows issuers to hold up to 70% of reserves in interest-bearing government debt, a significant increase from the 60% threshold proposed in earlier drafts.

Concurrently, the central bank has substituted previously suggested holding limits with a temporary issuance cap set at 40 billion pounds, equivalent to approximately 52.8 billion dollars. The Bank stated in its Monday press release that this guardrail will undergo regular reviews and be removed once risks to credit provision are adequately addressed. This strategic pivot replaces the holding limits outlined in the November 2025 consultation, which would have restricted individuals to 20,000 pounds and businesses to 10 million pounds per stablecoin. At that time, the Bank argued such limits were essential to prevent large-scale deposit shifts out of the banking system, a scenario that could reduce credit availability for households and enterprises.

However, respondents to the consultation warned that these restrictions might severely limit stablecoin usability and create operational hurdles for issuers. Woofun AI notes that the revised approach aims to achieve the same policy objectives while permitting unrestricted usage by both households and businesses. The new regime applies exclusively to stablecoins deemed systemic, whereas non-systemic stablecoins primarily used for crypto trading will remain under the supervision of the Financial Conduct Authority. In May, Deputy Governor Sarah Breeden indicated that the Bank was reconsidering its proposed holding limits and reserve requirements following feedback from digital asset companies. These industry participants argued that the initial restrictions could hinder adoption and render UK-issued stablecoins less competitive against dollar-backed rivals. Woofun AI analysis suggests that by balancing reserve flexibility with a hard issuance ceiling, the Bank of England seeks to foster innovation while maintaining strict oversight over potential systemic shocks to the broader financial architecture.