New Proposals for Sterling-Denominated Stablecoins
The United Kingdom’s central bank is moving toward stablecoin regulation by publishing a consultation paper proposing a regulatory framework for the asset class. The Bank of England (BoE) on Monday released a proposed regulatory regime for sterling-denominated “systemic stablecoins,” or tokens it said are widely used in payments and therefore potentially pose risks to the UK financial stability.
Under the proposal, the central bank would require stablecoin issuers to back at least 40% of their liabilities with unremunerated deposits at the BoE, while allowing up to 60% in short-term UK government debt. The consultation paper seeks feedback on the proposed regime until Feb. 10, 2026, with the BoE planning to finalize the regulations in the second half of the year.
Holding Limits, Backing, and Oversight Requirements
As part of the proposal, the central bank suggested capping individual stablecoin holdings at 20,000 British pounds ($26,300) per token, while allowing exemptions from the proposed 10,000 pound ($13,200) for retail businesses. “We propose that issuers implement per-coin holding limits of 20,000 GBP for individuals and 10 million pounds for businesses,” the BoE stated, adding that businesses could qualify for exemptions if higher balances are needed in the course of normal operations.
Regarding stablecoin backing, the BoE suggested that issuers considered systemically important could be allowed to hold up to 95% of their backing assets in UK government debt securities as they scale. “The percentage would be reduced to 60% once the stablecoin reaches a scale where this is appropriate to mitigate the risks posed by the stablecoin’s systemic importance without impeding the firm’s viability,” it added.
The BoE noted that His Majesty’s Treasury determines which stablecoin payment systems and service providers are deemed systemically important. Once designated, these systems would fall under the proposed regime and the BoE’s supervision.