Bank of England and FCA set joint framework for systemic UK stablecoin issuers
Key Takeaways
- 01HM Treasury recognition as a systemic stablecoin issuer will trigger joint supervision by the Bank of England and the FCA from the date of recognition.
- 02The framework targets stablecoins used widely in payments that could pose risks to UK financial stability.
- 03The FCA will oversee consumer protection, competition and market integrity, while the Bank will lead prudential regulation for systemic issuers.
- 04The Bank has proposed that newly recognised systemic issuers hold 95% of reserve assets in short-term sterling UK government debt and 5% in non-interest-bearing central bank deposits.
- 05FCA authorisation for UK qualifying stablecoin issuance will be required from October 2027; before 25 October 2027, issuers should be registered under the Money Laundering Regulations.
The Bank of England and Financial Conduct Authority (FCA) have set out how they will jointly regulate UK-issued qualifying stablecoins once an issuer is recognised as systemic by HM Treasury. A systemic designation applies where a stablecoin is widely used for payments and could create risks to UK financial stability.
The framework is intended to divide responsibilities between the two regulators while maintaining a single regime for issuers. The FCA will regulate all qualifying stablecoin issuers operating from a UK establishment, focusing on consumer protection, market integrity and effective competition. For systemic issuers, the Bank will take responsibility for prudential regulation—rules aimed at financial soundness—and other elements specified in its June 2026 publication.
Joint regulation begins on the day HM Treasury recognises an issuer as systemic. The Bank and FCA will each supervise compliance with their respective rules. This means a stablecoin issuer that becomes systemic will face an additional prudential regulator rather than moving out of FCA oversight.
The Bank has also proposed a step-up approach for newly recognised systemic stablecoin issuers. Under that proposal, an issuer could hold up to 95% of backing assets in short-term, sterling-denominated UK government debt and must hold the remaining 5% as non-interest-bearing deposits at the central bank.
From October 2027, a firm must obtain FCA authorisation to issue a qualifying stablecoin from the UK under Article 9M of the Financial Services and Markets Act 2000 (Regulated Activities) Order. Until 25 October 2027, firms seeking to issue stablecoins in the UK should be registered with the FCA under the Money Laundering Regulations.
For stablecoin businesses, the practical issue is whether their payments activity could lead HM Treasury to designate them systemic. Those issuers will need to prepare for dual supervision, including Bank of England prudential requirements on the composition and custody of reserve assets, alongside FCA conduct requirements.