The Bank of England (BoE) on Monday 10 November 2025 published its long-awaited discussion paper on the proposed regulatory framework for system stablecoins pegged to the British pound, with final rules expected to be published in the second half of 2026.
Open consultation is February 10, 2026will target fiat-backed British pound stablecoins, which have increased adoption in payment chains and could threaten financial stability. Algorithmic, commodity-backed, and non-GBP variants are said to be explicitly excluded from the scope.
40% locked in BoE, 60% locked in Gilt: the math behind a secure GBP coin
Systemic stablecoin issuers must fully back outstanding tokens with high-quality liquid assets. The Bank of England suggests:
- at least 40% A portion of the debt must be held as a non-remunerative deposit with the central bank for immediate liquidity access.
- The remaining 60% They may be held as short-term UK government bonds with a remaining maturity of less than one year.
For stablecoin issuers that are designated or scaling up to system status, a transition period will allow for temporary scaling provisions. up to 95% For short-term female stocks, there will be a gradual reduction to 60% of the norm once a yet-to-be-finalized risk-based threshold is reached.
20,000 pounds per person, 10 million pounds per company, BOE draws the line
To limit concentration risk and potential bank deposit outflows, the BoE suggests the following: Holding limit per coin:
- 20,000 pounds Personal is an exception, but so is retail, which requires a higher operational balance and needs.
- £10 million For non-financial institutions.
Financial institutions are exempt from these limits.
Who will become the “systemic” stablecoin?
The UK Treasury will be responsible for determining which stablecoin arrangements are ‘systematic in the payment chain’ (SPC) and subject to regulatory oversight by the BOE. He specified that system issuers must meet the same capital, liquidity, operational resilience, and recovery standards as systemically important payment systems.
Redemption at face value should be possible within one business day under normal circumstances and is mandatory along with interoperability between approved wallets and high custody frameworks.
The Financial Conduct Authority (FCA) will maintain conduct, consumer protection and AML oversight across all stablecoin activity, while the BoE’s remit remains focused on systemic stability risks.
The framework will leverage powers granted under the Financial Services and Markets Act 2023. The BOE has laid out a phased compliance schedule to ease the transition for existing issuers.
London’s Flexible Play vs EU’s MiCA Hammer: Battle for stablecoin headquarters
The UK’s principles-based approach conflicts with the European Union’s rulebook-style MiCA regime currently in place, as well as ongoing US legislation.
As things stand, the crypto sector believes that London could become the preferred jurisdiction for institutional GBP stablecoin issuance due to the Bank of England’s support mix and flexibility for expansion.