The Bank of England has published a consultation paper proposing a regulatory regime for sterling-denominated systemic stablecoins, setting out how issuers and related payment system service providers would be supervised for prudential and financial stability risks. The regime is intended for stablecoins that could be used for retail payments and, potentially, wholesale settlement, while non-systemic stablecoins used mainly for cryptoasset trading would sit in the Financial Conduct Authority’s framework. If HM Treasury recognises a stablecoin payment system as systemic, it would transition into the Bank’s regime and be jointly regulated, with the Bank overseeing prudential and stability requirements and the FCA continuing conduct and consumer protection supervision. On backing assets, systemic issuers would be permitted to hold up to 60% in short-term UK government debt, with the remaining 40% held in unremunerated accounts at the Bank of England. Issuers that are systemic at launch, or that transition from the FCA regime, would initially be able to hold up to 95% in short-term UK government debt, and the consultation also seeks views on central bank liquidity arrangements to backstop issuers in stress if they cannot monetise backing assets in private markets. To manage risks to credit provision from rapid outflows of bank deposits into new forms of digital money, the Bank proposes temporary holding limits of GBP 20,000 per coin for individuals and GBP 10 million for businesses, with an exemptions regime for the largest businesses; the caps would not apply to stablecoins used to settle wholesale financial market transactions in the Bank and FCA’s Digital Securities Sandbox. A separate publication sets out the Bank’s approach to quantifying these deposit outflow risks and invites feedback on alternative mechanisms. The consultation closes on 10 February 2026. The Bank plans to consider responses before consulting on and then finalising Codes of Practice later in 2026, and the Bank and the FCA intend to publish a joint approach document in 2026 covering how the two regimes will operate in practice and how firms transition when recognised as systemic.
Bank of England 2025-11-10
Bank of England consults on sterling systemic stablecoin regime with 60% UK government debt backing cap and GBP 20,000 individual holding limit
The Bank of England issued a consultation paper on a regulatory regime for sterling-denominated systemic stablecoins, focusing on prudential and financial stability supervision. The regime targets stablecoins for retail payments and potential wholesale settlement, allowing systemic issuers to hold up to 60% in short-term UK government debt. Temporary holding limits are proposed to manage risks from rapid bank deposit outflows, with exemptions for large businesses and separate provisions for wholesale market transactions.