The Bank of England on Monday published its final policy statement and draft Code of Practice for systemic stablecoin issuers, outlining a clearer UK pathway for regulated stablecoins. The central bank also eased elements of proposals it had previously put forward for industry consultation, replacing some earlier constraints with a new framework designed to balance financial stability, investor protection and “safe innovation” for UK-issued digital money.
The BoE said the updated approach is intended to preserve the economy’s access to credit while reducing operational complexity for issuers, with the regime expected to take effect in a managed transition ahead of regulated stablecoins operating in the UK from 2027.
Key takeaways
- Policy shift: The BoE moved away from planned holding limits for individual stablecoin holders and instead introduced an issuance guardrail that caps the total amount each systemic stablecoin can issue during the transition period.
- Catalyst: The final framework reflects consultation feedback from industry and other stakeholders, including adjustments to backing-asset rules.
- Capital and liquidity design: Issuers can hold up to 70% of backing assets in short-term UK government debt, up from 60% previously proposed, with the remainder in central bank deposits.
- Implementation timeline: Stakeholders have until 22 September 2026 to respond to the draft Code, and the BoE plans to finalise the Code by the end of 2026.
- Regulatory coordination: The Bank will work with the Financial Conduct Authority to create an end-to-end stablecoin regime, with further details expected alongside the FCA’s final rules.
What drove the move
In its policy statement, the Bank of England said the framework aims to support the development of UK-issued stablecoins as trusted forms of digital money, while keeping the system resilient to redemption pressures. The BoE’s revised design follows last year’s industry consultation and is positioned as a “cheaper and easier to implement” alternative to holding caps, without changing the underlying policy outcome it intends to deliver.
Rather than restricting how much an individual can hold, the BoE said it will control issuance from systemic stablecoin providers during the transition phase. According to the central bank, this issuance guardrail is meant to safeguard access to credit in the wider economy and avoid the operational complexity associated with holding limits.
Issuance guardrail replaces holding caps
A central feature of the final policy statement is the treatment of systemic stablecoins during the transitional period. The BoE said the total amount that can be issued by each systemic stablecoin will be restricted—effectively shifting the focus from holder limits to supply-side controls.
The Bank set the guardrail at £40 billion, adding that it would be reviewed regularly and removed once risks to credit provision are addressed. The BoE also stated that households and businesses would be allowed unrestricted use of stablecoins under the new approach.
Backing asset rules eased after consultation
The Bank said its final framework incorporates feedback received during the consultation process. One of the key revisions concerns the composition of backing assets held by systemic stablecoin issuers.
Under the final rules, issuers will be permitted to hold up to 70% of their backing assets in short-term UK government debt, increasing the allowable share from the 60% figure that had been included in earlier proposals. The remaining portion must be held in central bank deposits.
The BoE said central bank deposits are intended to help issuers meet redemption requests promptly. At the same time, the revised asset mix is designed to support more viable business models while maintaining the issuer’s capacity to respond to outflows, in line with the framework’s focus on resilience, confidence and trust in money.
Bank and FCA coordinate the wider regime
The BoE said it is working closely with the Financial Conduct Authority to build an end-to-end regulatory regime for stablecoins in the UK. The joint effort includes developing a managed transition process for firms that move from non-systemic to systemic operators.
The Bank indicated that additional details would be published alongside the FCA’s final rules. In comments accompanying the announcement, Sarah Breeden, Deputy Governor for Financial Stability, described the publication of the policy statement and draft rules as a significant step for the UK’s payments and digital money framework.
Breeden said the framework provides foundations for trust in a new form of money through prompt redemption, strong protections and central bank support, calling it a “world-leading regime.”
What to watch next
According to the BoE, stakeholders have until 22 September 2026 to submit feedback on the draft Code of Practice. The central bank said it intends to finalise the Code by the end of 2026, with further supporting materials expected as it continues joint work with the FCA.
The BoE also said the framework is expected to allow regulated stablecoins to operate in the UK from 2027, laying groundwork for a formal regime for systemic issuers and broader adoption of digital payment innovations under central bank oversight. Investors and market participants may focus on the remaining details to be released with the FCA’s final rules, along with how the transition will be managed for firms moving into systemic status.
