Bank of England says it will be ‘the banker to the stablecoin’

The Bank of England has picked a side in the stablecoin debate. It wants to be the bank behind them.

A Bank of England deputy said the central bank will serve as “the banker to the stablecoin,” a notable phrase from an institution not usually known for warm words about crypto.

The comment follows a June 22, 2026 policy statement that softens several of the bank’s earlier proposals for sterling-denominated stablecoins. The changes came after what the bank described as extensive feedback from industry.

What the Bank of England actually changed

The policy statement arrived alongside a draft Code of Practice for stablecoin issuers. Together, they form the latest version of the framework for sterling stablecoins that reach systemic scale.

The headline change is a new cap. Each stablecoin will face a temporary £40 billion issuance guardrail.

That guardrail replaces something the industry liked far less: limits on how much any individual could hold. Under the earlier approach, the restriction landed on users. Under the new one, it lands on the size of each coin.

The second big change concerns reserves, the pool of assets backing each token. The bank raised the share of reserves that can sit in short-term UK government debt from 60% to 70%.

The remaining 30% can be held as deposits at the central bank. That split is where the “banker to the stablecoin” line starts to make practical sense.

Why reserves are the whole game

A stablecoin is only as stable as what sits behind it. If a token promises to be worth one pound, holders need confidence they can swap it back for one pound, quickly, on demand.

Short-term government debt earns interest, which is how issuers make money. Central bank deposits are about as safe and liquid as money gets, which is how issuers keep their promises during a rush for the exits.

Moving from 60% to 70% in government debt tilts the balance toward the income side. Put simply, issuers get a bit more room to earn a return on their reserves, while still keeping a meaningful cushion parked at the central bank.

Deputy Governor Sarah Breeden has framed the bank’s goal around exactly this tension. She has emphasized a framework that guarantees prompt redemption and strong protections for stablecoin users, while making room for central bank support.

The timeline: rules in 2026, operations in 2027

None of this is live yet. The bank plans to finish implementing the full framework by the end of 2026.

Stablecoin operations under the regime are then slated to begin from 2027. That gives issuers roughly a year and a half from the June statement to get their structures, reserves and compliance in order.

The £40 billion figure is also explicitly temporary. The bank described it as a guardrail, which suggests the number is meant to hold the line while the market finds its footing, not to serve as a permanent ceiling.

Notably, the announcements do not name any specific stablecoin projects. The focus is entirely on the rules themselves.

Background: from cautious to cooperative

The Bank of England’s earlier proposals reflected caution about large sums moving out of bank deposits and into tokens, which could strain the traditional banking system. Holding limits on individuals were one way to stop a sudden, large migration of savings into stablecoins.

The June 22 statement keeps the caution but changes the tools. Instead of policing individual wallets, the bank is capping issuance and shaping reserves.

What this means for issuers and the market

For firms weighing a sterling stablecoin, the biggest gift here is clarity. A defined issuance cap, a known reserve split and a firm timeline make it far easier to build a business plan than a vague promise of future rules.

Dropping per-person holding limits, in particular, removes a feature that could have made sterling coins less useful for payments and trading.

There are still open questions. A £40 billion cap per coin is generous for a market that has yet to launch under these rules, but it is still a limit, and how the bank treats it once the temporary period ends will matter for anyone planning to scale.

The draft Code of Practice is also just that, a draft. Issuers will want to see the final version before committing capital, and the 2027 start date leaves time for further adjustments.

Disclosure: This article was edited by Kaye Quema. For more information on how we create and review content, see our Editorial Policy.