Bank of England removes stablecoin wallet cap; Aave founder seeks market-rate reserves

The Bank of England published a policy statement and draft Code of Practice for systemic stablecoin issuers on June 22, dropping proposed individual holding caps in favor of a temporary £40 billion per-coin issuance guardrail and raising the permitted share of interest-bearing backing assets to 70%, with the remaining 30% held as central bank deposits. The change abandons the earlier plan to cap sterling stablecoin ownership at £20,000 per person and £10 million per business, a shift the BoE says is easier to implement while still protecting redemptions under stress. The revised framework follows criticism from industry and lawmakers that the earlier approach was overly restrictive and operationally complex. Deputy Governor Sarah Breeden said in May that the original proposals may have been "overly conservative," while Coinbase CEO Brian Armstrong and the House of Lords Financial Services Regulation Committee urged the BoE to scrap the holding caps and revisit reserve rules. Aave founder Stani said the 30% reserve requirement would be acceptable if the Bank of England paid a market interest rate on those balances, but also warned that non-interest-bearing reserves and the issuance cap could hurt issuer economics, slow expansion and push firms offshore. Feedback is due by September 22, 2026, final rules are expected by year-end, and the BoE is targeting a live regime for regulated stablecoins by 2027.