Bank of England Set to Receive Stablecoin Innovation Mandate: £40 Billion Cap Planned
The United Kingdom is planning to grant the Bank of England a mandate to support stablecoin innovation while setting a temporary £40 billion issuance cap for systemic stablecoins and establishing new authorization dates.
The UK Treasury plans to implement this change through an amendment to be added to the Financial Services and Markets Bill. If the amendment is enacted, the Bank of England will be obligated to support stablecoin and digital currency innovation in addition to its mandate to maintain financial stability. Stablecoins, whose value is generally pegged to an asset like the dollar, will be at the heart of this framework.
The central bank will also report annually to Parliament on how it is supporting innovation in payment systems and digital currencies. City Minister Lucy Rigby stated that financial stability will remain the bank’s primary objective, adding that the new mandate will strengthen the UK’s position in the digital finance sector.
£40 Billion Issuance Cap Planned for Systemic Stablecoins
The Bank of England plans to temporarily apply a £40 billion issuance limit for each stablecoin deemed systemic. This cap will apply to the amount that can be issued for each systemic stablecoin individually, rather than the total market value of all stablecoins.
Issuers could be allowed to hold up to 70% of their reserves in short-term UK government debt, with the remainder kept in central bank deposits. The UK is working on a single regulatory system that could cover digital representations of bank deposits on the blockchain and AI-powered payments, alongside stablecoins.
Under rules prepared by the Financial Conduct Authority for crypto firms and stablecoin issuers, companies will be able to apply for authorization starting September 30, 2026. The new regime is scheduled to take effect on October 25, 2027. According to DeFiLlama data, the total market value of the stablecoin market has reached approximately $303 billion.