New Framework Aims to Safeguard Financial Stability Amidst Digital Asset Integration
The Bank of England (BoE) has released a consultation paper outlining a proposed framework to regulate sterling-denominated “systemic stablecoins,” marking a key step in the UK’s efforts to modernize its payments landscape while safeguarding financial stability.
Announced on Monday, the proposal introduces temporary holding limits and stringent reserve requirements for stablecoin issuers as digital assets become increasingly integrated into traditional finance.
The consultation, which runs until February 10, 2026, seeks public feedback from banks, fintechs, and consumers.
Proposed Holding Limits and Reserve Requirements
Under the draft rules, individuals would be restricted to holding up to £20,000 in any systemic stablecoin, while businesses would face a cap of £10 million per coin. Exemptions could be granted to large firms, such as retailers or crypto exchanges, that require higher balances for operational purposes.
The BoE emphasized that these caps are temporary measures designed to mitigate risks during the transition to a more digital financial system. The central bank warned that sudden, large-scale shifts from bank deposits into stablecoins could threaten credit availability and destabilize the broader economy.
To ensure resilience, the BoE also proposed that stablecoin issuers must back at least 40% of their liabilities with non-interest-bearing deposits at the central bank, with the remaining 60% held in short-term UK government debt. For newly designated systemic issuers, this mix could initially include up to 95% government debt, gradually reduced as the stablecoin grows in scale.
Supervisory Responsibilities and Future Outlook
His Majesty’s Treasury will decide which stablecoin providers are classified as “systemically important,” making them subject to the BoE’s direct supervision. Non-systemic stablecoins would remain under the Financial Conduct Authority (FCA).
Deputy Governor Sarah Breeden noted that the proposed framework aims to strike a balance between innovation and stability, allowing regulated stablecoins to coexist alongside cash and traditional bank money.
The BoE expects to finalize the new regulatory regime in the second half of 2026, a move that could position the UK as a global leader in the safe integration of digital currencies into mainstream payments.