Key Takeaways
- •The Bank of England has proposed new regulations for sterling-denominated systemic stablecoins.
- •These regulations are intended to provide market clarity and impact stablecoin issuers and institutional participation.
- •The proposals may influence fiscal policies and the broader fintech innovation landscape.
Bank of England Introduces Regulatory Framework for Stablecoins
The Bank of England published a consultation paper on November 10, 2025, proposing a regulatory regime for sterling-denominated systemic stablecoins. This initiative signifies a substantial change in the UK's approach to overseeing stablecoin issuers and aims to enhance market transparency.
These regulations are designed to offer clarity to the market, affecting entities that issue stablecoins and potentially influencing regulatory decisions on a global scale.
Oversight of Sterling Stablecoins by the Bank of England
The Bank of England has released a consultation paper outlining a proposed regulatory regime specifically for sterling-denominated systemic stablecoins. This represents a significant evolution in the UK's oversight of stablecoin issuers and aims to foster greater transparency within the market.
Sarah Breeden, Deputy Governor for Financial Stability, has been instrumental in developing these proposals. The framework is intended to both support innovation and build confidence, with oversight responsibilities shared between the Bank of England (BoE) and the Financial Conduct Authority (FCA). The proposed regime is considered vital for ensuring clarity in payment systems.
"Today’s proposals mark a pivotal step towards implementing the UK’s stablecoin regime next year. Our objective remains to support innovation and build trust in this emerging form of money. We’ve listened carefully to feedback and amended our proposals for achieving this, including on how stablecoin issuers interact with the Bank of England. These proposals are fit for a future where stablecoins play a meaningful role in payments, giving the industry the clarity it needs to plan with confidence." — Sarah Breeden, Deputy Governor for Financial Stability
£20,000 Holding Limit to Manage Bank Outflows
The proposals include a £20,000 holding limit for stablecoins. This measure is designed to prevent substantial outflows of funds from traditional banks into stablecoin assets. Additionally, stablecoin issuers will be required to back their assets with UK government gilts. These steps are intended to contribute to the stability of the financial market.
The clarity provided by these regulations is anticipated to encourage major payment firms to participate in the market. This could stimulate new investment and enhance consumer confidence in transactions conducted using stablecoins, thereby impacting the wider digital economy.
Influence of the 2022 TerraUSD Collapse on Regulations
The development of these regulations has been informed by past stablecoin failures, such as the collapse of TerraUSD in 2022, which primarily involved crypto-native tokens. The current focus is on establishing a secure ecosystem for fiat-backed stablecoins that are integral to payment systems.
Industry experts suggest that these guidelines may encourage other prominent stablecoin issuers to seek systemic status. Adherence to these standards in the future could progressively reshape the global stablecoin landscape.