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On Monday, the Bank of England published a policy statement and draft Code of Practice for Systemically Important Stablecoin Issuers,
establishing a framework for stablecoin regulation in the UK.
The purpose of this framework is to ensure the development of UK-issued stablecoins as reliable forms of digital money. Stablecoins have the potential to provide faster, cheaper, and more flexible services for users, including cross-border transactions, as well as support for new programmable payment features.
The policy statement and draft rules reflect feedback received during last year's consultation. The Bank of England and the Financial Conduct Authority (FCA) are working together to develop a comprehensive regulatory regime, including a managed transition for companies from non-systemic to systemic status.
Following engagement with industry and stakeholders, the Bank amended last year's proposals. The maximum share of assets held in interest-bearing instruments—specifically, short-term UK government bonds—was increased from 60% to 70%, with the remainder to be held on central bank deposits.
The bank will introduce a temporary issuance cap for each system stablecoin, initially set at £40 billion, replacing the temporary storage limits discussed last year. This cap will be reviewed regularly and will be lifted once the risks to lending are addressed.
Sarah Breedon, Deputy Governor for Financial Stability, stated: “This is a crucial step in expanding choice and fostering innovation in the UK payments industry. Innovation thrives where there is trust. Today, we have laid the foundations for this trust for a new form of money – with rapid redemption, robust security, and central bank support. This is a truly world-class regime.”
The bank intends to finalize the Code of Practice by the end of 2026, taking into account feedback due by 22 September 2026. This will allow regulated stablecoins to begin operating in the UK from 2027.