The United Kingdom’s central bank is taking steps toward regulating stablecoins by publishing a consultation paper outlining a potential regulatory framework for the digital asset.
On Monday, the Bank of England (BoE) unveiled a proposed regime for sterling-denominated “systemic stablecoins”—tokens widely used for payments that could pose risks to UK financial stability.
Under the plan, stablecoin issuers would be required to back at least 40% of their liabilities with non-interest-bearing deposits at the BoE, while up to 60% could be held in short-term UK government debt.
The consultation period will remain open until February 10, 2026, with the BoE aiming to finalize the regulations in the latter half of that year.
Limits on holdings, backing, and oversight
The proposal also suggests capping individual stablecoin holdings at £20,000 ($26,300) per token, while retail businesses would generally face a £10,000 ($13,200) limit, though exemptions could apply.
“We propose that issuers implement per-coin holding limits of £20,000 for individuals and £10 million for businesses,” the BoE said, noting that businesses could request higher limits if needed for normal operations.
Regarding stablecoin backing, the BoE indicated that issuers deemed systemically important could initially hold up to 95% of their backing assets in UK government debt securities as they grow.
“The percentage would be reduced to 60% once the stablecoin reaches a scale where this is appropriate to manage the risks associated with its systemic importance without threatening the issuer’s viability,” the BoE added.
The central bank also noted that His Majesty’s Treasury determines which stablecoin payment systems and service providers are classified as systemically important. Once designated, these entities would be subject to the proposed regulatory framework and oversight by the BoE.
