The UK central bank is moving towards stablecoin regulation by publishing a consultation paper proposing a regulatory framework for the asset class.
The Bank of England (BoE) on Monday published a regulatory proposal for sterling-denominated “systemic stablecoins,” or tokens, that are widely utilized in payments and subsequently potentially pose risks to the U.K.'s financial stability.
Under the proposal, the central bank would require stablecoin issuers to collateralize a minimum of 40% of their liabilities with non-interest-bearing deposits with the BoE, while allowing as much as 60% short-term UK government debt.
The consultation paper seeks feedback on the proposed regime by February 10, 2026, with the BoE planning to finalize the regulations within the second half of the yr.
Holding limits, support and supervision
As a part of the proposal, the central bank proposed capping holdings of individual stablecoins at 20,000 British kilos ($26,300) per token, while allowing exemptions from the proposed 10,000 kilos ($13,200) for retail businesses.
“We propose that issuers introduce per-coin holding limits of £20,000 for people and £10 million for businesses,” the BoE said, adding that companies could qualify for exemptions if higher balances are required as a part of normal business operations.
Schedule for the regulation of sterling-denominated stablecoins by the Bank of England. Source: BoE
Regarding stablecoin collateralization, the BoE suggested that issuers deemed systemically essential may very well be allowed to carry as much as 95% of their collateral assets in UK government bonds as they scale up.
“The percentage could be reduced to 60% once the stablecoin reaches a level where this is suitable to mitigate the risks posed by the systemic importance of the stablecoin without affecting the viability of the corporate,” he added.
The BoE noted that His Majesty's Treasury determines which stablecoin payment systems and repair providers are considered systemically essential. Once designated, these systems would fall under the proposed regime and BoE oversight.
