Bank of England Eases Stablecoin Regulations... Issuance Possible by 2027

Abolishing Holding Limits, Introducing Issuance Caps

Regarding the Bank of England’s (the UK central bank) policy on pound-denominated stablecoins, announced on June 22 (local time), Kiwoom Securities stated on June 24 that “the regulatory intensity has been relaxed compared to the previous consultation.” The policy statement and draft rules released by the Bank of England are seen as more flexible than the consultation paper from November 2025.

Stablecoins are digital assets designed to maintain a fixed value against fiat currencies such as the US dollar or the British pound. Their value is backed 1:1 by cash or government bonds held by the issuer, which reduces price volatility. Issuance volume has been steadily increasing, and the current market is effectively dominated by US dollar-denominated stablecoins.

In November 2025, the Bank of England discussed imposing stablecoin-specific holding limits on individuals and companies, and proposed a reserve structure that limited the share of UK short-term government bonds to a maximum of 60%, with the remaining 40% to be held as deposits at the Bank of England.

However, the direction has shifted somewhat in the latest draft. Instead of setting holding limits for individuals and institutions, the total issuance of each stablecoin is now capped at 40 billion pounds. The maximum share of UK short-term government bonds in the reserve has also been increased from 60% to 70%.

Industry criticism is behind the regulatory easing. Soobin Sim, a researcher at Kiwoom Securities, viewed the changes as “partially reflecting concerns that the previous regulatory proposal was excessively conservative compared to the US and EU.” However, requirements such as the 24-hour redemption and liquidity standards for user protection remain intact.

Major countries are also rapidly establishing stablecoin regulations. In the US, the first federal stablecoin law, the “GENIUS Act,” will take effect in July 2025, mandating 1:1 reserve holdings and licensing for issuers. The European Union (EU) regulates stablecoins as electronic money tokens under the Markets in Crypto-Assets Regulation (MiCA). The UK is currently developing its own regulatory framework in line with these global trends.

The timeline for implementation has also become clearer. Researcher Sim noted that “the Bank of England will collect opinions on the proposal until September 22,” and, citing some foreign media, predicted that the final regulations may be confirmed by the end of 2026. In this case, the issuance and use of pound-denominated stablecoins in the UK could become possible starting in 2027.

This content was produced with the assistance of AI translation services.