The Bank of England just changed stablecoin rules. Issuers keep the interest now.
The UK is not just opening the door to regulated stablecoins. It is choosing who gets paid when reserves earn money.
CryptoVibe Desk · stablecoins · uk · regulation
- →The Bank of England replaced user holding limits with a temporary £40 billion cap per systemic stablecoin, according to CoinDesk.
- →The catch is the reserve design: issuers can put 70% in short UK government debt, but holders get no interest.
- →Watch the September 2026 feedback window because the no-interest rule decides who captures the money behind UK stablecoins.
- Stablecoin → A stablecoin is a crypto token designed to stay close to a real-world currency like the pound or dollar.
- Gilts → Gilts are UK government debt, meaning money lent to the government for a set time.
- Reserves → Reserves are the assets an issuer holds so users can redeem a stablecoin for real money.
£40 billion is the new UK stablecoin guardrail. According to CoinDesk, the Bank of England dropped its proposed £20,000 individual limit. It also dropped the £10 million corporate limit. It replaced both with a temporary £40 billion cap per systemic stablecoin.
The real move is not the cap. It is the interest rule. CoinDesk says issuers must keep 30% of reserves in non-interest-bearing Bank of England deposits. They can put up to 70% in UK gilts under six months. Holders still cannot receive interest or dividends.
That means the UK is building stablecoins around issuers keeping the reserve income. The BoE softened the user limits after pressure from lawmakers and the crypto industry. But it kept the line that matters most. Issuers can earn on much of the backing. Users cannot share that return.
If you're holding a regulated UK stablecoin in 2027, this is your bag in plain English. The backing layer can make money. The token in your wallet cannot. Cashback, loyalty points, and payment rewards may be allowed. Passive interest is still blocked.
This is not a small design choice. It turns the Tether model from a market habit into a regulatory default. The economics are straightforward. A stablecoin issuer gets scale, holds government debt, and keeps the income. The holder gets payment utility and price stability, for now.
The historical parallel is 1970s money market funds. Banks hated them because customers could move idle cash into products that shared more of the return. The UK framework does the opposite for stablecoins. It stops the payment token from becoming a yield product before the market opens.
The BoE says the £40 billion cap is temporary. It can fade as the market matures. Fine. The cap is not the only number that matters. The 70% reserve allowance is the business model. The 0% holder payout is the political choice.
The UK still gets a cleaner path to regulated stablecoins in 2027. That matters. But the first version already picks winners. Payment issuers get room to earn. Yield-sharing competitors get boxed out before they launch.
The BoE's no-interest ban locks in issuer income because it treats holder yield as the risk, not issuers keeping the money.
By the September 2026 feedback deadline, watch whether the BoE keeps the no-interest ban unchanged in the revised text.
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