Summary
The Bank of England has published its policy statement and draft Code of Practice for sterling-denominated systemic stablecoin issuers, marking a key milestone in establishing the UK's stablecoin regime. The framework supports safe innovation, enabling UK-issued stablecoins to develop as trusted forms of digital money, with the FCA regulating non-systemic stablecoins and the Bank jointly regulating systemic ones with the FCA. Deputy Governor Sarah Breeden called it "a major milestone in delivering greater choice and innovation in UK payments" and "truly a world leading regime."
The Bank made two key revisions in response to industry feedback. First, it increased the maximum share of backing assets held in interest-bearing short-term UK government debt from 60% to 70%, with 30% in unremunerated central bank deposits. Second, it replaced the proposed per-coin holding limits with a temporary issuance guardrail of £40 billion per systemic stablecoin, which is cheaper and easier to implement while delivering the same policy outcome. The Bank also confirmed it will introduce a Central Bank Liquidity Facility as a backstop for systemic issuers.
Key Facts
- Policy statement + draft Code of Practice published; consultation closes September 22, 2026
- Backing assets: 70% short-term UK government debt (up from 60%), 30% unremunerated BoE deposits
- Systemic-at-launch issuers can hold up to 95% in UK government debt as they scale
- Temporary issuance guardrail: £40B per systemic stablecoin (replaces per-coin holding limits)
- Yield/interest to coinholders prohibited; activity-based rewards permitted
- Redemptions: as soon as practicable, within 24 hours of a full redemption request
- Redemptions cannot be suspended for any reason; continuous redeemability required
- Central Bank Liquidity Facility: backstop lending against UK government debt (details in 2027)
- Two statutory trusts: backing assets/financial risk reserve, and wind-down reserve
- Capital: higher of 6 months' operating expenses or cost of recovery + wind-down plans
- Direct access to payment systems expected for systemic issuers
- Code of Practice to be finalized by end-2026; regime live from 2027
- UK-US Joint Statement on Stablecoins and Transatlantic Taskforce context
Why It Matters
The Bank of England's systemic stablecoin regime is a defining piece of global stablecoin regulation, establishing how a major central bank will supervise stablecoins used as money at scale. The 70/30 backing asset split and the £40B issuance guardrail balance business-model viability with financial stability, while the Central Bank Liquidity Facility is a clear differentiator from other international regimes. The UK's approach — including its prohibition on yield but permission for activity-based rewards — will shape how stablecoin issuers design products and compete globally, and it sets a benchmark for other jurisdictions.