BoE softens systemic stablecoin rules

What does this mean?

The BoE has made meaningful changes to the proposals consulted on to improve the commercial viability of sterling-denominated systemic stablecoins. Most notably, it reduced the proportion of backing assets required to be held as unremunerated central bank deposits from 40% to 30% and increased the share that can be invested in short-term UK Government debt to 70%. It also replaced proposed holding limits with a temporary £40bn issuance guardrail per systemic stablecoin. Together, these changes address two of the most significant concerns raised during the consultation period and signal a greater willingness to support viable issuance models in the UK.

The BoE has not changed its underlying regulatory philosophy. Systemic stablecoins will be regulated as critical payments infrastructure rather than cryptoassets. The draft Code of Practice introduces extensive requirements covering liquidity management, capital, safeguarding, governance, operational resilience and redemption. Issuers will be expected to maintain liquidity contingency plans, conduct stress testing, perform daily reconciliations, maintain statutory trust arrangements and ensure that coinholders can redeem at par value within 24 hours. The BoE also confirmed that systemic issuers will not be permitted to suspend redemptions, even during periods of stress. The draft Code of Practice also provides greater clarity on how redemption requirements will operate in practice, with the 24-hour redemption period only beginning once AML/KYC checks have been completed and a full redemption request has been received. This addresses industry concerns around operational feasibility and potential unintended consequences for financial crime controls. Taken together, these requirements mean the BoE is regulating systemic stablecoins more like financial market infrastructure than traditional cryptoasset activities.

The statement also provides greater clarity on how firms may move into the systemic regime. HM Treasury will continue to determine whether a stablecoin becomes systemic based on factors such as scale, substitutability, interconnectedness and use cases. The BoE deliberately avoids introducing fixed thresholds and makes clear that the £40bn issuance guardrail should not be interpreted as a systemic designation trigger. While this preserves regulatory flexibility, it means firms still face uncertainty around when systemic requirements may apply. The BoE expects firms to transition from FCA-only supervision into joint BoE and FCA oversight as they scale, with transition periods potentially lasting between 12 and 36 months.

Beyond sterling stablecoins, the statement provides important insight into the UK's broader approach to digital money. The BoE continues to position stablecoins as part of a future multi-money ecosystem alongside commercial bank money, tokenised deposits and potentially a retail central bank digital currency. It also confirmed plans for a future Central Bank Liquidity Facility for eligible systemic issuers, reinforcing the role stablecoins may play in the future payments landscape.

The statement is also significant from an international perspective. The BoE confirms a deference-first approach for non-sterling systemic stablecoins, under which it may rely on overseas regulators where comparable outcomes and effective supervisory cooperation exist. However, it also makes clear that UK-specific requirements may apply where equivalence cannot be demonstrated. The BoE is notably cautious on multi-issuance stablecoin structures, highlighting concerns around reserve fragmentation, redemption certainty and legal protections across jurisdictions.

What do firms need to do?

Firms should look beyond the detailed requirements and consider what this means for the future structure of money and payments. The UK has now set out a credible pathway for stablecoins to operate at systemic scale, with the BoE positioning them alongside commercial bank money, tokenised deposits and a potential retail central bank digital currency, within a future multi-money ecosystem.

While focused on sterling-denominated systemic stablecoins, the framework is likely to have broader relevance. As one of the most comprehensive prudential approaches published by a major central bank, it may become an important reference point for future regulatory frameworks in other jurisdictions. Firms operating internationally should therefore consider not only the direct UK implications, but also what the policy statement signals about the direction of travel for global stablecoin regulation.

The statement provides greater certainty around how stablecoins can scale within a regulated environment. The remaining challenge is less about regulation and more about adoption. The commercial success of sterling stablecoins will depend on whether firms can build compelling payment, settlement and treasury use cases, achieve distribution at scale and operate within an increasingly interconnected digital money ecosystem.

Next steps

The consultation closes on 22 September 2026, with the BoE intending to finalise the Code of Practice by the end of 2026. Additional guidance, failure arrangements and supervisory expectations will be developed during 2027 alongside continued coordination with the FCA. This will allow regulated stablecoins to operate in the UK from 2027.