Bank of England Eases Stablecoin Framework After Industry Pushback
The Bank of England has revised its proposed framework for sterling stablecoins, scaling back restrictions following concerns that the original approach could stifle development in the nascent market.
The central bank, which is crafting rules for pound-backed stablecoins intended for widespread use in retail payments, has abandoned plans to limit individual holdings. Instead, it will cap the total amount each stablecoin can issue, starting at £40 billion ($52.8 billion).
The Bank has also relaxed its stance on reserve assets. Under the updated proposal, issuers of commonly used stablecoins will be permitted to allocate up to 70% of their reserves in short-term government debt, an increase from the 60% previously suggested.
The remaining reserves must be held in non-interest-bearing deposits at the central bank.
Stablecoins are digital tokens designed to maintain a fixed value, typically by pegging to fiat currency and backing it with traditional assets such as government bonds.
In the UK, regulation in this space remains limited and primarily focused on anti-money laundering requirements and financial promotions. This contrasts with the European Union, where the MiCA framework has been in effect since December 2024, though it is currently under review.
Bank of England deputy governor for financial stability Sarah Breeden stated: “This is a major milestone in delivering greater choice and innovation in UK payments. Innovation thrives on trust. And today we’ve set out the foundations of that trust for a new form of money—with prompt redemption, strong protections and central bank support. This is truly a world-leading regime.”
The Bank said it will accept feedback on the proposals until 22 September 2026 and aims to finalize the Code of Practice by the end of that year.
Additional supporting documents are expected later, along with ongoing collaborative work with the Financial Conduct Authority.
These changes would enable regulated stablecoins to begin operating in the UK from 2027.
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