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- BoE consultation open until Feb 2026 on GBP stablecoins.
- Individual caps set at £20,000; businesses £10 million, with exemptions.
- Final rules aim to protect UK financial stability while enabling digital payments.
The Bank of England (BoE) has taken a major step toward regulating stablecoins by launching a public consultation on its proposed framework for sterling-denominated tokens. The consultation will run until February 10, 2026, with the BoE planning to finalize the rules later that year.
Setting the Stage for Stablecoin Oversight
The BoE’s proposed regulatory regime targets “systemic stablecoins” — tokens widely used in payments that could impact UK financial stability. Under the framework, issuers must back at least 40% of their stablecoin liabilities with unremunerated deposits at the BoE, while up to 60% can be held in short-term UK government debt.
Additionally, individual holders could be capped at £20,000 per token, with businesses subject to a £10 million limit. Exemptions for higher balances may apply for businesses needing larger sums for routine operations. Systemically important issuers may hold up to 95% of backing assets in UK government debt as they scale, gradually reducing to 60% once the stablecoin reaches critical systemic levels.
Defining Systemic Stablecoins
The BoE’s framework focuses on GBP-pegged stablecoins used for retail, corporate, and cross-border payments. His Majesty’s Treasury will designate which payment systems and service providers are considered systemically important. Non-GBP stablecoins, such as USDT or USDC, are currently outside the scope of these rules, although the BoE will engage with their home regulators if systemic use in the UK emerges.
Also Read: ISO 20022 Deadline Nears: SWIFT Forces Global Bank Migration
Risks, Custody, and Public Ledgers
The central bank highlighted concerns about self-custody wallets and public permissionless blockchains. Self-custodial wallets could hinder timely payouts during issuer failure and complicate enforcement of holding limits. Public ledgers, meanwhile, present operational and settlement risks due to unclear accountability. The BoE also flagged interest-paying stablecoins as an area under ongoing scrutiny.
The consultation marks a significant milestone in the UK’s approach to stablecoin regulation. By establishing clear rules and safeguards for systemic tokens, the BoE aims to protect financial stability while enabling innovation in digital payments. Finalized regulations are expected in the second half of 2026, shaping the future of sterling-based digital assets.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
