Bank of England Publishes New Stablecoin Rules
BITmarkets Team
Jun 23, 2026
Under the proposed framework, systemic stablecoins are defined as digital assets that are widely used for payments and could potentially impact the country’s financial stability. The responsibility for determining whether a stablecoin qualifies as systemic will rest with HM Treasury.
One of the key changes in the latest proposal is an increase in the amount of reserves issuers may hold in interest-bearing government securities. The BoE plans to allow up to 70% of reserves to be invested in government debt, compared with the 60% limit outlined in earlier proposals.
Additionally, the central bank has replaced previously proposed holding restrictions with a temporary issuance cap of 40 billion pounds ($52.8 billion). “This guardrail will be reviewed regularly and removed once risks to credit provision have been addressed,” the Bank of England stated.
Industry welcomes regulatory progress
The updated proposal has drawn mixed reactions from industry participants, with many viewing it as a step toward a more practical regulatory environment for stablecoins. Katie Harries, Coinbase’s Head of Policy for Europe, noted that the proposal makes the UK unique among major jurisdictions by introducing a cap on stablecoin issuance denominated in its own national currency.
“Two questions remain if the UK is to fully capitalize on the benefits stablecoins can bring: what 'temporary' means for the per-coin issuance cap and whether stablecoins can be used for settlement in core wholesale markets, without which the UK's tokenization ambitions will not be delivered," she said.
The BoE intends to finalize its stablecoin rulebook by the end of 2026, with implementation targeted for 2027.
Mark Fairless, CEO of ClearBank, described the changes as a positive development, particularly the decision to move away from strict holding limits.
“The Bank of England has clearly listened on holding limits, moving away from a complex and restrictive approach towards a more proportionate framework. That is a positive step,” Fairless said. “But further progress is needed to ensure the regime does not constrain sustainable business models, particularly through the backing asset requirements.”
Shift away from earlier restrictions
The latest proposal reflects significant adjustments following industry feedback received during the BoE’s consultation process. In its November 2025 consultation, the central bank proposed limiting individual stablecoin holdings to 20,000 pounds and business holdings to 10 million pounds per stablecoin. At the time, regulators argued such restrictions were necessary to prevent excessive migration of deposits away from traditional banks, which could reduce lending capacity across the economy.
However, market participants warned that these limits would undermine the usefulness of stablecoins and create operational challenges for issuers. As a result, the BoE has opted for an issuance-based safeguard instead of direct holding limits. The central bank believes this approach can address financial stability concerns while allowing households and businesses to use stablecoins without restrictions.
“The endgame should be a truly risk-based framework rather than a one-size-fits-all approach, otherwise the UK is in danger of leaving sterling stablecoins at the starting line while other markets move ahead," Fairless added. The proposed rules will apply only to stablecoins classified as systemic. Non-systemic stablecoins, particularly those used primarily within crypto markets, will continue to fall under the supervision of the UK’s Financial Conduct Authority (FCA).
The revised framework follows comments made in May by BoE Deputy Governor Sarah Breeden, who indicated that the central bank was reconsidering its earlier proposals after digital asset companies argued that strict reserve requirements and holding limits could hinder adoption and reduce the competitiveness of UK-issued stablecoins compared with US dollar-backed alternatives.
Sources:
https://cointelegraph.com/news/bank-of-england-stablecoin-rules-clears-path-for-2027-launch
https://www.bankofengland.co.uk/paper/2026/ps/sterling-denominated-systemic-stablecoin
