The Bank of England has moved from consultation proposals to a policy statement and draft Code of Practice for sterling-denominated systemic stablecoins—coins whose scale or use could affect UK financial stability. The framework is intended to support stablecoins as trusted forms of digital money for payments while safeguarding the financial system and the resilience of payment services.
The regime would apply after HM Treasury recognises a stablecoin arrangement as systemic. The Bank would supervise systemic-risk, reserve and payment-system resilience matters. The Financial Conduct Authority (FCA) would supervise non-systemic stablecoins, including those used mainly for cryptoasset trading, and the regulators are developing a managed transition for firms that grow from the FCA regime into the Bank’s systemic regime.
The Bank would retain powers under the Banking Act 2009 to obtain information, set principles and codes, require operating rules, issue binding directions and enforce requirements against systemic stablecoin issuers and relevant recognised arrangements. Firms within a recognised arrangement may be treated as a payment system or, where appropriate, a service provider.
A central change from the earlier consultation concerns reserve assets. A systemic issuer could hold up to 70% of backing assets in short-term UK government debt, increased from the earlier proposed 60%. It would have to hold the remaining 30% in deposits at the Bank of England. The central-bank deposit requirement is intended to ensure that issuers can meet redemption requests promptly. The earlier proposed investment concentration limits are not reflected in the new draft-Code summary.
The Bank has also replaced proposed temporary limits on individual household and business holdings with a temporary issuance guardrail. Each systemic stablecoin would initially be capped at £40 billion in issuance, while users could hold and use stablecoins without individual limits. The Bank says the guardrail is designed to protect the economy’s access to bank credit and will be reviewed regularly, with removal planned once the relevant credit-provision risks have been addressed.
The Bank does not propose direct regulation of systemic stablecoin custodians. Instead, firms it supervises would need to demonstrate that custodial wallet providers do not compromise the payment system’s integrity, operational resilience or ability to complete transactions.
Comments on the draft Code of Practice are due by 22 September 2026. The Bank intends to finalise the Code by the end of 2026, alongside further work with the FCA, and aims to allow regulated stablecoins to begin operating in the UK in 2027. Potential issuers, payment-system operators, reserve managers and wallet providers should assess whether they could be part of a Treasury-recognised systemic arrangement and whether their reserve, governance, redemption and operational-resilience arrangements can meet the proposed standards.