Bank of England Initiates Consultation on Stablecoin Regulations, Final Rules Expected by 2026

The Bank of England (BoE) is taking significant steps toward the regulation of stablecoins by releasing a consultation paper designed to establish a regulatory framework for these digital assets.

Key Takeaways

The Bank of England has proposed a regulatory framework for "systemic stablecoins" that could impact UK financial stability.
Issuers would need to back at least 40% of their liabilities with deposits at the BoE and can use up to 60% in short-term UK government debt.
Individual stablecoin holdings may be capped at £20,000 ($26,300), with possible exemptions for businesses.
Feedback on the proposal is open until February 10, 2026, with final regulations expected in the latter half of that year.

Bank of England launches stablecoin consultation, plans final rules in 2026

Proposed Regulatory Framework

The Bank of England announced its proposal for regulating sterling-denominated “systemic stablecoins,” which are tokens that are extensively used for payments and may pose risks to financial stability in the UK.

As outlined in the consultation paper, the central bank plans to require that stablecoin issuers maintain at least 40% of their liabilities in unremunerated deposits with the BoE. Additionally, issuers would be allowed to back up to 60% of their liabilities with short-term UK government debt.

The consultation is open for feedback until February 10, 2026, and the BoE aims to finalize the regulatory framework during the second half of that year.

Limits, Backing, and Oversight

As part of this proposal, the BoE suggests limiting individual stablecoin holdings to £20,000 (approximately $26,300) per token. However, there will be exemptions for retail businesses that require larger amounts, allowing limits of up to £10 million for such entities.

The central bank explained, "We propose that issuers implement per-coin holding limits of £20,000 for individuals and £10 million for businesses," indicating that some businesses may qualify for exemptions if they need higher balances for routine operations.

Central Bank, Bank of England, United States, United Kingdom, Stablecoin Timeline for regulation on sterling-denominated stablecoins by the Bank of England. Source: BoE

Regarding the backing of stablecoins, the BoE noted that issuers deemed systemically important might be allowed to hold up to 95% of their backing assets in UK government debt as they grow. However, this percentage would decrease to 60% when the stablecoin reaches a size that allows for proper risk mitigation without compromising the issuer's viability.

The BoE does clarify that His Majesty’s Treasury will identify which stablecoin payment systems and service providers are labeled as systemically important. These designated systems would then fall under the proposed regulatory regime and the supervision of the BoE.

Related: Bank of England pledges to keep pace with US on stablecoin regulations
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