Bank of England Announces Proposals on Stablecoin Regulation
By Renae DyerThe Bank of England laid out its latest proposals for regulating stablecoins, a type of cryptocurrency pegged to another asset.The regulation applies to sterling-denominated "systemic" stablecoins, or those widely used for payments in the U.K. Stablecoins used as assets for non-systemic purposes, such as the buying and selling of cryptoassets, will be supervised by the Financial Conduct Authority.Under the BOE's regime, individuals would be limited to owning up to 20,000 pounds ($26,322) of sterling-denominated systemic stablecoins, while businesses would be limited to holding up to 10 million pounds. These would be temporary limits and removed "once the transition no longer poses risks to the provision of finance to the real economy," the bank said Monday.Systemic stablecoin issuers would be able to hold up to 60% of backing assets in short-term U.K. government debt. The rest will need to be held in unremunerated deposits at the central bank.Issuers considered systemic at launch or transitioning to becoming so would initially be allowed to hold 95% of their assets in short-term government debt.The BOE is also considering central bank liquidity arrangements to support systemic stablecoin issuers in times of stress."Today's proposals mark a pivotal step towards implementing the U.K.'s stablecoin regime next year," BOE deputy governor for financial stability, Sarah Breeden, said."We've listened carefully to feedback and amended our proposals for achieving this, including on how stablecoin issuers interact with the Bank of England."The BOE and the FCA plan to publish a joint approach document in 2026 to clarify how the rules will apply.Once the consultation is complete, the BOE will consider feedback before finalizing codes of practice later in 2026 setting out detailed requirements for systemic stablecoins.Write to Renae Dyer at [email protected]