The Bank of England has taken a significant step towards embracing digital payments, publishing its comprehensive policy statement and draft Code of Practice for systemic stablecoin issuers in the United Kingdom. The regulatory framework aims to strike a balance between fostering innovation and ensuring public trust in these novel forms of money.
Stablecoins, pegged to a stable asset like the British pound, have the potential to transform payments by offering faster, cheaper, and more flexible services. With 1.4 billion pounds held in UK-issued stablecoins as of March this year, according to a Bank of England report, these digital currencies are gaining traction. The updated policy reflects feedback from industry stakeholders and provides clear guidelines for coin issuers to innovate while maintaining resilience.
Key policy decisions include an increase in the maximum share of backing assets held in interest-bearing short-term UK government debt, rising from 60% to 70%. This adjustment supports more viable business models for stablecoin issuers. The Bank has also introduced a temporary issuance guardrail initially set at £40 billion per systemic stablecoin, instead of previously considered temporary holding limits.
Sarah Breeden, Deputy Governor for Financial Stability at the Bank of England, stressed that this development represents a major milestone in delivering greater choice and innovation in UK payments. She highlighted the regime's focus on prompt redemption, strong protections, and central bank support as key factors in building trust for this new form of money.
The Bank is collaborating with the Financial Conduct Authority (FCA) to establish a seamless end-to-end regulatory regime. Further details are expected alongside the FCA’s final rules. Subject to feedback by 22 September 2026, the Bank intends to finalise the Code of Practice by the end of 2026, with regulated stablecoins anticipated to be operational in the UK from 2027.