BoE: Proposed regulatory regime for sterling-denominated systemic stablecoins/ The role of holding limits for sterling-denominated systemic stablecoins and a potential digital pound

BoE has launched this consultation following the December 2023 discussion paper.  In response to feedback, systemic stablecoin issuers will be permitted to hold up to 60% of backing assets in short-term UK government debt. Whilst issuers considered systemic at launch, or transitioning from the FCA regime, will initially be able to hold up to 95% of backing assets in short-term UK government debt, to support their viability as they grow. In a new proposal, BoE is also considering central bank liquidity arrangements to support systemic stablecoin issuers in times of stress.  BoE is proposing temporary holding limits of £20,000 per coin for individuals and £10m for businesses (with an exemptions regime to allow the largest businesses to hold more if required).  These limits would be removed once the transition no longer poses risks to the provision of finance to the real economy and would not apply to stablecoins used for settling wholesale financial market transactions in BoE and FCA’s Digital Securities Sandbox.  Responses are required by 10 February 2026.  Alongside the consultation, BoE has published its approach to quantifying the risks to the provision of finance to the economy from potentially significant and rapid outflows of bank deposits into new forms of digital money.