Bank’s New Digital Money Rules: £20k Cap & Beer Fund-Level Debt 🍻

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So apparently the Bank of England has decided to grow up and get serious about digital money, proposing a flashy new framework for sterling stablecoins that includes a £20,000 limit per person (basically my entire savings, lol) and letting them stash up to 60% of reserves in short-term UK government debt. Because nothing says “stable” like betting the farm on gilts and hope Gordon Brown doesn’t haunt us back. 😬

Bank of England Proposes Sweeping Rules to Regulate Sterling Stablecoins

On a drizzly November 10 (naturally), the Bank of England – yes, that lot in the posh building who somehow still use fax machines – launched a consultation about regulating systemic stablecoins. Because of course they did. Digital money is so 2024, darling, and if we’re going to let crypto bros near our national currency, we’d better have some rules. Enter: The BoE, arms akimbo, ready to save us from ourselves.

Their logic? Let’s “safely innovate” the financial system so that one day I can pay my £4.50 oat milk flat white with a “digital coin” named something cringe like PoundPebble™. And the BoE, bless their risk-averse hearts, said: “We want the public to have choice, but not so much choice they accidentally bankrupt the economy.”

Deputy Governor Sarah Breeden, the nation’s financial mum, declared with maternal concern:

Today’s proposals mark a pivotal step towards implementing the UK’s stablecoin regime next year. Our objective remains to support innovation and build trust in this emerging form of money.

Translation: We’re letting them play with digital money, but we’re keeping the sharp scissors. 🔪

The BoE then dropped the details – and here’s where it gets juicy. Systemic stablecoin bigwigs can now hold up to 60% of their backing assets in short-term UK government debt. That’s right: nearly two-thirds of your “stable” digital pound might actually just be hopes, dreams, and a mildly concerning amount of gilts.

But wait – it gets better. If you’re launching as a systemic player (whatever that means), you can initially stash up to 95%! of reserves in government debt. 95%! The remaining 5% is likely just a coffee fund and a bunch of IOUs from interns. Then, using “unremunerated accounts” at the Bank (fancy term for “we won’t pay you interest, but please still trust us”), they’re promising to “ensure robust redemption.” Sure, Jan.

Cue dramatic music 🎻 because now we get to the real tea: risk control.

To safeguard continued access to credit as the financial system gradually adapts to new forms of digital money, the Bank is proposing temporary holding limits of £20,000 per coin for individuals and £10 million for businesses (with an exemptions regime to allow the largest businesses to hold more if required).

That’s right – mere mortals like me are capped at £20k. So if I want to buy a house with my stablecoin, I’ll need three separate wallets and a false beard. But large businesses? Oh, they can apply for more. Because of course they can. The exemptions regime probably involves a secret handshake and a signed letter from Rishi Sunak’s golden retriever.

And just to clarify – these limits are “temporary.” Famous last words. They’ll be scrapped once the BoE is confident the economy won’t implode. Or, more realistically, when they’ve upgraded their IT systems to something post-2003.

Also, good news for the cool kids: stablecoins used in the Bank and FCA’s Digital Securities Sandbox (which sounds like a playground for finance nerds) are exempt. So the right people can still play. Phew.

The FCA, still doing its best to look busy, will keep regulating the small fry. But once a stablecoin gets “systemic” – probably defined as “bigger than Barclays’ bonus pot” – it’s co-regulated by both the BoE and FCA. Because two regulators are better than one, right? Unless you’re trying to get anything done.

The consultation is open until Feb 10, 2026 – which feels like forever, but honestly, that’s probably how long it’ll take me to understand what a stablecoin actually does. Final Codes of Practice are expected later in the year. Rain check?

FAQ ⏰

  • What is the Bank of England’s goal with the stablecoin consultation?
    To let digital money exist without us all losing our pensions. Basically, they want innovation but with training wheels and a safety net. And probably liability waivers.
  • How much of stablecoin backing assets can be held in government debt?
    Up to 60% for most systemic issuers, but 95% if you’re a launch-day VIP. Because legacy status never went out of fashion.
  • What limits are being proposed for stablecoin holdings?
    £20,000 per person – or roughly enough to buy a used Prius. Businesses can have £10 million, or enough to fund a small indie film. Larger firms? Just ask nicely.
  • When does the consultation close?
    Feb 10, 2026. Mark your calendars. Or just set a reminder in three years, alongside “check if crypto is still a thing.”

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2025-11-12 06:59