The Bank of England has opened a public consultation on its proposed framework for regulating sterling-denominated stablecoins, aiming to finalise the rules in the second half of 2026.
A framework for the future of digital money
The consultation paper, published on Monday, sets out how so-called “systemic” stablecoins — those expected to be widely used for payments — could operate within the UK’s financial system. The Bank said the rules are designed to ensure that digital money innovations “can occur safely while maintaining financial stability and consumer confidence.”
Under the proposals, issuers of systemic stablecoins would need to hold their backing assets in a mix of short-term UK government securities and non-interest-bearing deposits at the Bank of England. The regime would apply only to sterling-based stablecoins deemed large or critical enough to affect payment systems.
Focus on safety, access and stability
Officials said the consultation aims to balance innovation with prudence, setting standards for redemption, backing assets and capital requirements. Consumers would also face temporary holding limits — £20,000 for individuals and £10 million for businesses — to prevent mass shifts of deposits away from banks.
The Bank has made clear that stablecoins must meet the same level of trust and reliability as traditional money if they are to be used for everyday transactions. “We are designing a framework that enables competition but upholds the integrity of the UK’s monetary system,” a spokesperson said.
Joint regulatory effort with the FCA
The consultation, which runs until February 2026, will be followed by a joint publication with the Financial Conduct Authority outlining how the two regulators will divide responsibilities. The FCA will oversee conduct and consumer protection, while the Bank will regulate prudential and systemic aspects.
Officials said final rules are expected to be published in late 2026, giving issuers time to adapt before enforcement begins.
Industry response and global context
The initiative places the UK among the first major economies to move toward a comprehensive framework for stablecoins, following similar discussions in the European Union, Japan and Singapore. Crypto and fintech groups have cautiously welcomed the consultation but warned that restrictive caps and liquidity requirements could limit innovation.
Analysts say the consultation reflects a broader recognition that stablecoins may soon play a mainstream role in payments and digital commerce. How the UK handles their regulation could set a precedent for global standards in the next phase of digital finance.
Looking ahead
By launching the consultation, the Bank of England is positioning itself at the centre of the debate over the coexistence of public and private digital money. The outcome will determine not only the future of stablecoins in Britain, but also how the country navigates the evolving balance between financial innovation and stability.
Newshub Editorial in Europe – 2025-11-10
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