Bank of England consultation on Systemic Stablecoins

Bank of England Consults on New Rules for Systemic Stablecoins

The Bank of England (BoE) opened a three-month consultation this week (10 November 2025), on revised proposals for a UK regulatory regime for sterling-denominated (GBP) systemic stablecoins.

What are Systemic Stablecoins?

Stablecoins are cryptocurrencies designed to maintain a stable value by pegging their market value to an external reference, typically fiat currency. The term ‘systemic’ stablecoins refers to those that are ‘widely used’ in payments and are consequently assessed as potentially posing risks to UK financial stability.

Systemic stablecoin issuers are defined as a ‘recognised payment system’ or service provider issuing the stablecoin. Once recognised as systemic by HM Treasury (HMT), these entities will be jointly regulated by the BoE (for financial stability and prudential standards) and the Financial Conduct Authority (FCA) (for conduct and consumer protection).

Summary of the November 2025 Proposed Regime

The BoE’s latest proposals are a pivotal step towards implementing UK stablecoin rules next year (2026). Key elements of the proposed regime include:

1. Backing Assets: Systemic stablecoin issuers will be permitted to hold up to 60 per cent of backing assets in short-term UK government debt. The remaining at least 40 per cent must be held as unremunerated deposits at the Bank of England.
2. Holding Limits: The BoE proposes temporary holding limits to mitigate financial stability risks stemming from potential outflows of bank deposits.
   • The limits are set at £20,000 per coin for individuals and £10 million for businesses.
   • Exemptions may be granted to large retail businesses and intermediaries.
   • These limits would be removed once the transition to the new regime no longer poses a risk to the provision of finance in the traditional financial system and economy.
3. Liquidity Support: The central bank is considering establishing a backstop lending facility to support eligible, solvent, and viable systemic stablecoin issuers in times of stress.
4. Step-Up Regime: For stablecoin issuers considered ‘systemic at launch’, a temporary regime would allow them initially to invest up to 95 per cent of backing assets in short-term UK government debt, reducing to 60 per cent as the stablecoin reaches actual systemic scale.
5. Location: Non-UK based, sterling-denominated systemic stablecoin issuers must set up a subsidiary in the UK and hold backing assets and assets funded by capital in the UK.

How the Proposal Differs from Previous Plans

The November 2025 proposals evolved from initial proposals laid out two years ago (November 2023). The most significant and contentious element that was revised related to the backing assets:

• The 2023 discussion paper proposed that systemic stablecoin issuers should fully back their stablecoins 100% with unremunerated deposits at the Bank of England.
• This approach was widely criticised by industry respondents as inconsistent with other jurisdictions and incompatible with viable stablecoin revenue models.

In response to this feedback, the 2025 proposal introduced the major revision allowing up to 60% of backing assets to be held in short-term UK government debt. This change aims to ensure that the regime supports viable business models while still mitigating financial stability risks. 

Differences from the EU’s MiCAR

The UK’s approach to regulating systemic stablecoins is distinct from the European Union’s Markets in Crypto-Assets Regulation (MiCAR), which came into full force in December 2024.

How do the UK proposals impact non-GBP stablecoins that become systemic in the UK?

The Bank of England will consider deferring to a non-UK authority (e.g. for an EU (MiCAR) or US approved stablecoin) in respect of non-GBP stablecoins.

When considering whether to defer to a non-UK authority concerning a non-sterling-denominated systemic stablecoin, focuses its assessment on five key areas to ensure the foreign regime delivers outcomes broadly equivalent to its UK proposals:

1. Regulatory Requirements: The BoE assesses whether the foreign authority’s requirements achieve similar outcomes, such as safeguarding financial stability, preserving trust and confidence in money and payments, and supporting innovation.
2. Risk Mitigation Measures: The foreign authority must demonstrate that it has appropriate safeguards in place to manage financial stability risks and ensure the orderly redemption of the stablecoin.
3. Supervisory Approach: The stablecoin arrangement and its issuer must be subject to supervision that is comparable to the BoE’s own approach.
4. Failure Arrangements: The foreign authority must have credible arrangements to manage issuer failure without creating additional financial stability risks in the UK. This includes ensuring the failure regime does not unfairly prioritise domestic coinholders over foreign coinholders.
5. Co-operation Arrangements: There must be sufficient co-operation and information sharing agreements between the BoE and the home authority. Crucially, the BoE states that the higher the UK activity or risks posed to the UK, the higher the expectation it has for the depth of this co-operation and information sharing. We expect MoU’s between regulatory authorities would be needed.

Following the US President’s state visit to the UK in September 2025, the BoE has actively flagged the new Transatlantic Taskforce aimed at greater UK-US collaboration on tokenised markets.