Bank of England Revises Rules for Systemic Sterling Stablecoins

The Bank of England changes its proposed framework

The Bank of England published a new policy statement and draft Code of Practice on June 22, 2026, setting out how sterling-denominated stablecoins would be regulated once they become widely used in payments and are recognised as systemically important.

The framework primarily applies to systemic stablecoins used for payments, rather than digital assets used mainly for trading or investment. Systemic issuers would be jointly regulated by the Bank of England and the Financial Conduct Authority after recognition by HM Treasury.

The Bank intends to finalise the Code of Practice by the end of 2026. A further joint publication with the FCA is expected to explain how firms will transition from the FCA’s non-systemic regime into joint Bank-FCA supervision.

Individual and business holding limits have been removed

The Bank’s 2025 consultation proposed temporary limits of £20,000 per individual and £10 million per business for each systemic stablecoin, with possible exemptions for larger businesses.

Following industry feedback, the Bank has decided not to implement per-user holding limits. Respondents argued that the limits would be costly and technically difficult to enforce, particularly across wallets, exchanges and other participants in the stablecoin ecosystem.

Under the revised approach, individuals and businesses will be able to use systemic stablecoins without restrictions on transaction size, frequency or type, except where other laws or regulatory requirements apply.

A £40 billion issuance guardrail replaces user limits

Instead of restricting how much each user can hold, the Bank will introduce a temporary limit on the total amount of each systemic stablecoin that can be issued.

Each systemic sterling stablecoin will initially be subject to a maximum issuance level of £40 billion.

The Bank said the guardrail is intended to limit the risk of a rapid movement of funds from commercial bank deposits into stablecoins. Such a shift could affect bank funding and, in turn, the availability of credit to households and businesses.

The guardrail will be reviewed regularly. The Bank expects to loosen and ultimately remove it once regulators are satisfied that the financial system has adapted and the risks to credit provision have been effectively managed.

Issuers can hold more short-term government debt

The Bank has also revised the composition of the assets that systemic stablecoin issuers must hold behind their coins.

Under the updated steady-state framework:

• 70% may be held in short-term sterling-denominated UK government debt;
• 30% must be held as unremunerated deposits at the Bank of England.

The previous consultation proposed a 60% government debt and 40% central bank deposit structure.

The short-term government securities must generally have a remaining maturity of no more than six months. According to the Bank, this is intended to reduce price volatility while allowing issuers to earn a return on part of their backing assets.

For issuers considered systemic from launch, a step-up arrangement may temporarily allow as much as 95% of backing assets to be held in short-term government securities while the business scales. The permitted share would later be reduced toward the standard 70% level.

Redemption and liquidity remain central requirements

The proposed rules require systemic stablecoins to maintain high-quality backing assets and support redemption at par.

The Bank plans to introduce a central bank liquidity facility for eligible systemic stablecoin issuers. This facility would provide short-term, collateralised central bank deposits against qualifying UK government debt in exceptional circumstances.

It is designed as a backstop rather than a routine source of liquidity. Issuers would remain responsible for managing normal redemption demand through their own liquid assets and private-market mechanisms.

The Bank also intends to require issuers to establish clear legal redemption rights for coinholders and appropriate arrangements for operational failure, insolvency or orderly wind-down.

What the rules mean for payment businesses

The revised framework makes a clearer distinction between stablecoins used as payment infrastructure and cryptoassets used primarily for trading.

For payment companies, fintech platforms and businesses considering stablecoin settlement, several questions will become increasingly important:

• Is the stablecoin classified as systemic or non-systemic?
• Which regulator supervises the issuer?
• What assets support redemption?
• How quickly can users redeem the stablecoin at par?
• How are liquidity, operational resilience and safeguarding managed?
• How will the issuer transition between the FCA and Bank of England regimes?
• Can transaction and accounting records support reconciliation and regulatory reporting?

The removal of user-level holding limits may make systemic stablecoins easier to use in business payments, treasury movements and wholesale settlement. However, the issuance guardrail and reserve rules show that regulators still want adoption to proceed gradually.

The UK is preparing stablecoins for payment use at scale

The policy statement does not mean that a systemic sterling stablecoin is already operating under the final framework.

The draft Code of Practice remains subject to consultation until September 22, 2026, and the Bank plans to finalise the rules by the end of the year. Additional guidance and supporting materials are expected in 2027.

The direction is nevertheless clear: the UK is building a regulatory structure in which stablecoins may operate alongside commercial bank money and other payment methods, provided issuers can demonstrate reliable redemption, strong liquidity and operational resilience.

For cross-border businesses, stablecoins may eventually provide additional settlement and treasury options. But their usefulness will depend on the regulatory status of the issuer, the currencies and markets supported, and how the stablecoin connects with banking, accounting and compliance systems.