The Bank of England (BoE) has proposed new rules for companies issuing large-scale stablecoins, aiming to hold them to the same standards as traditional payment systems.
Under the draft plan released Monday, companies whose stablecoins are widely used for payments will be required to maintain strong reserve support. They will be allowed to place up to 60% of their reserves in short-term UK government bonds, with the remainder held in cash or other highly liquid assets to ensure repayments can be made at any time.
The central bank said it wants stablecoins to be secure, fully backed and easy to convert into pounds, so they can be used with confidence in everyday transactions. The proposal follows months of work by UK regulators to build a permanent framework for digital money and payment tokens.
To limit risk during the initial phase, the Bank of England suggested temporary limits on holdings. Individuals could hold up to £20,000 (around $26,000) in a single systemic stablecoin, while companies could hold up to £10 million (around $13 million). Officials said the limits would be lifted only when they were confident that large-scale use of stablecoins would not threaten financial stability.
Lt. Gov. Sarah Breeden said the rules are designed to ensure new forms of digital money are “as reliable as the money people use today.” He added that the UK is working closely with US and European regulators to maintain consistent standards as stablecoins become more common in cross-border payments.
Only stablecoins deemed “systemic” – those with the potential to impact the wider UK financial system – will be under the direct supervision of the Bank of England. Smaller or trading-focused tokens will continue to be overseen by the Financial Conduct Authority (FCA) on lighter terms.
The central bank’s consultation is open until February 10, 2026, after which it will review responses and publish final guidelines later this year. The new framework is expected to come into force at the end of 2026.
Stablecoins have grown rapidly in recent years and now play an important role in global crypto markets, where they are used for payments, lending, and settlements. Regulators are concerned that poorly backed currencies could cause losses for users or destabilize payment networks if trust falls.
In the UK, the government wants to encourage innovation in digital finance, but within strict limits. The Bank of England said its proposals aim to make stablecoins “trustworthy forms of private money” while ensuring that any company offering them can survive sudden withdrawals or price shocks.
Crypto industry groups have warned that high reserve requirements and holding limits could slow adoption and make the UK less competitive as a digital asset hub. But supporters say clear rules will finally allow stablecoin companies to operate within the regulated financial system rather than at its edge.
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