The UK central bank outlines strict reserve and holding requirements for systemic stablecoins, aiming to safeguard financial stability while supporting innovation.
The Bank of England (BoE) has taken a major step toward regulating the rapidly growing stablecoin sector, publishing a consultation paper that lays out a proposed framework for sterling-denominated stablecoins. The plan seeks to balance financial stability and technological innovation, with final rules expected in the second half of 2026.
Proposed Stablecoin Regulations
According to the BoE, stablecoins widely used for payments could pose systemic risks if not properly regulated. The proposed framework would require issuers to back at least 40% of their liabilities with unremunerated deposits at the BoE, while the remaining 60% could be held in short-term UK government debt.
The central bank also plans to limit individual holdings to £20,000 ($26,300) per token and set a £10 million cap for businesses, with possible exemptions for companies that need larger balances. “We propose that issuers implement per-coin holding limits of 20,000 GBP for individuals and 10 million GBP for businesses,” the BoE stated.
Backing Rules and Oversight
The proposal emphasizes strict asset-backing standards to ensure that stablecoins maintain a reliable peg to the pound. Systemically important issuers may temporarily hold up to 95% of their reserves in government debt securities as they scale operations. However, this threshold would be reduced to 60% once the stablecoin reaches a systemic level, minimizing financial risks.
The BoE clarified that His Majesty’s Treasury will determine which stablecoin payment systems are considered systemically important. Once designated, these entities will fall under BoE supervision and the proposed regulatory regime.
The consultation is open for public feedback until February 10, 2026, allowing market participants to comment on key details such as backing ratios, reserve composition, and holding limits. The final framework is expected in the second half of 2026, aligning the UK with the United States and European Union in developing robust stablecoin oversight.
This marks one of the most comprehensive regulatory efforts in the world aimed at integrating stablecoins into traditional finance while maintaining monetary and payment stability.
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