Key Takeaways
- •The Bank of England has launched a consultation for a new stablecoin framework.
- •The proposal includes limits on individual and corporate holdings of stablecoins.
- •Specific requirements for reserve composition are introduced for major issuers.
- •His Majesty’s Treasury will designate which stablecoins are considered “systemic.”
- •The Financial Conduct Authority will oversee smaller issuers and consumer protection.
- •The public consultation period ends on February 10, 2026.
- •Final rules are anticipated to be implemented next year.
Stablecoin Reserves and Regulatory Scope
The Bank of England is currently seeking public feedback on its proposed new stablecoin framework, with the consultation period extending until February 10, 2026. The new regulations are expected to take effect in the following year.
Under the proposed rules, major stablecoin issuers will be mandated to hold at least 40% of their reserves in non-interest-bearing deposits with the Bank of England. The remaining 60% of reserves can be invested in short-term UK government bonds. During an initial transition period, issuers will have the flexibility to temporarily allocate up to 95% of their assets to government securities before adhering to the 60% reserve investment limit.
The Bank of England’s direct oversight will be exclusively applied to stablecoins deemed “systemic,” meaning those with significant usage that could potentially impact financial stability. The Financial Conduct Authority (FCA) will be responsible for consumer protection aspects and the regulation of smaller stablecoin issuers. The BoE has clarified that tokens primarily used for crypto-asset transactions without widespread adoption in mainstream payments will not fall under its direct supervisory purview.
Individual and Corporate Holding Caps
In a move that aligns with policies considered for central bank digital currencies (CBDCs), the Bank of England has also proposed holding limits for stablecoins. These limits are set at £20,000 per individual and £10 million per business. The central bank stated that these restrictions are necessary to mitigate potential instability arising from rapid capital migration.
However, these holding limits will not be enforced for wholesale usage within the UK’s Digital Securities Sandbox. This sandbox environment is designed to foster innovation in the tokenization of financial instruments. His Majesty’s Treasury will be responsible for determining which stablecoins qualify as “systemically important.” Once a stablecoin is designated as systemic, its issuers will be subject to direct supervision by the Bank of England, ensuring compliance with the reserve and stability standards outlined in the consultation document.
🇬🇧 JUST IN: The UK’s BOE proposes a £20K cap on individual stablecoin holdings and £10M for businesses. pic.twitter.com/85JXOrs5X5
— Cointelegraph (@Cointelegraph) November 10, 2025
A Controlled Path Toward Integration
Deputy Governor Sarah Breeden highlighted that the proposed holding limits and reserve requirements are intended as transitional safeguards rather than permanent restrictions. The primary objective, she explained, is to facilitate the integration of stablecoins into the broader UK payments ecosystem without compromising financial stability.
While the Bank’s strategy aims to encourage innovation within a framework of strict prudential oversight, some critics have voiced concerns that the proposed limits could potentially hinder competitiveness. Certain analysts suggest that the mandatory backing of reserves in government bonds might artificially inflate demand for state debt and could limit the growth of the private sector in digital finance.
The public consultation process is scheduled to conclude in early 2026. Following this, the Bank of England plans to finalize its regulatory framework for stablecoins in the latter half of the year. Once enacted, the UK will join a growing number of jurisdictions, including the European Union with its Markets in Crypto-Assets (MiCA) regulation, that are implementing formal rules for stablecoin operations.