The Bank of England (BoE) has published a consultation paper proposing a more flexible framework for regulating sterling-denominated stablecoins, aligning the UK closer to U.S. standards.
The paper, “Proposed Regulatory Regime for Sterling-Denominated Systemic Stablecoins,” suggests allowing issuers of widely used stablecoins to hold up to 60% of their reserves in short-term UK government debt, with the rest kept in unremunerated BoE accounts to ensure redemption stability. Systemic issuers, or those moving from the FCA framework could hold up to 95% in government debt during early growth stages.
The proposals also include temporary holding limits of £20,000 per coin for individuals and £10 million for businesses to protect credit access as the financial system adapts to digital money. The Bank of England (BoE) is considering providing central bank liquidity support during market stress to reinforce stability.
Non-systemic stablecoins will remain under the Financial Conduct Authority’s supervision, with systemic ones jointly overseen by both regulators.
Deputy Governor Sarah Breeden called the move “a pivotal step” toward implementing the UK’s stablecoin regime, stressing the goal of fostering innovation while maintaining trust. The BoE will review feedback before finalizing its rules in 2026.
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