On 10 November 2025, the Bank of England (BoE) published a consultation paper setting out its proposed regulatory regime for sterling-denominated systemic stablecoins.
Overview
Sterling-denominated systemic stablecoins are a new type of digital money designed to maintain a stable value and could be used for retail payments and wholesale settlement in the future. They will be regulated by the BoE and the Financial Conduct Authority (FCA), once recognised by HM Treasury (HMT).
Following recognition by HMT, these entities will be subject to the BoE’s powers under the Banking Act 2009. These include the power to obtain information, to issue principles and Codes of Practice, to require the establishment of system and service provider rules, and to make directions. The BoE also has powers of enforcement over systemic stablecoin issuers that fail to comply with the Bank’s regulatory requirements.
The consultation paper sets out the BoE’s proposed regulatory regime in relation to the use of sterling-denominated systemic stablecoins for UK payments, issued by non-banks; for banks, the BoE makes clear that the current regulatory regime for banking will apply. The proposals follow on from the BoE’s discussion paper on the regulatory regime for systemic payment systems using stablecoins, and related service providers, published in November 2023 and following further engagement with industry and stakeholders since publication.
The consultation paper also sets out the BoE’s current thinking on the use of sterling-denominated stablecoins as a settlement asset in wholesale financial markets, and its intended approach to non-sterling denominated stablecoins that could become systemic in the UK.
The BoE also makes clear that this regime would not cover stablecoins used as assets for non-systemic purposes, such as the buying and selling of cryptoassets, as those will be supervised by the FCA.
Key policy proposals
Backing assets: Substantial changes have been made to the proposal in the discussion paper in response to industry feedback, in particular stablecoin issuers will be permitted to hold up to 60% of backing assets in short-term sterling-denominated UK government debt and the remaining 40% the BoE would need to be held as unremunerated deposits at the BoE, with temporary deviations allowed from this split to meet large unanticipated redemption requests. However, issuers considered systemic at launch or transitioning from the FCA regime will initially be able to hold up to 95% of backing assets in short-term UK government debt to support their viability as they grow.
Capital and reserve requirements: The BoE continues to propose to use existing international standards (i.e. the CPMI-IOSCO Principles for Financial Market Infrastructures, or PFMI) as its baseline for capital requirements for general business risk of systemic stablecoin issuers, with some modifications, and also proposes that issuers holdreserves to mitigate financial risk and wind-down costs.
Holding limits: The BoE is proposing that issuers implement holding limits of £20,000 per coin for individuals and £10 million for businesses, with larger businesses being able to hold more if required under an exemptions regime. The BoE sets out that it anticipates that limits could be removed once financial stability risks have been mitigated. Alongside the consultation paper, the BoE has published its approach to quantifying the risks which has shaped the proposed holding limits, inviting feedback on alternative mechanisms for managing these risks.
Next steps
The BoE is seeking feedback on these proposals until 10 February 2026.
The BoE makes clear that this consultation paper is not intended to provide detailed implementation requirements at this stage but is intended to clarify policy positions and sets the groundwork for future phases of work including establishing certain codes of practice, which it intends to consult on during the course of next year.
In addition, also in 2026, the BoE and FCA will jointly consult on the detailed design of the regulatory framework focussing on providing clarity on how respective authorities’ remits will apply in practice.