The Bank of England has published a consultation on possible regulations for pound-based stablecoins.
The consultation proposes that stablecoins would be allowed to hold 60% of backing assets in short-term UK government debt. The balance would be held in unremunerated accounts at the Bank of England.
Issuers deemed “systemic” will initially be allowed to hold 95% of their backing assets in short-term UK government debt to support their viability as they grow.
The Financial Conduct Authority (FCA) will regulate non-systemic stablecoin issuers.
If an issuer is deemed systemic by HM Treasury, it will transition into the Bank’s regime and be jointly regulated.
The Bank said it was considering central bank liquidity agreements with systemic stablecoin issuers to backstop them during a possible period of stress.
The Bank is also proposing temporary holding limits of £20,000 in stablecoins for individuals and £10 million for businesses, with an exemptions regime to allow the largest companies to hold more.
These limits are expected to be removed once the transition is not deemed to pose risks to for finance to the real economy.
The limits would not apply to stablecoins used for settling wholesale financial market transactions in the Bank and FCA’s Digital Securities Sandbox.
The Bank outlined an approach to quantifying the risks to the provision of finance to the economy from potentially significant and rapid outflows of bank deposits into new forms of digital money.
Sarah Breeden, Deputy Governor for Financial Stability, called the consultation a pivotal step towards implementing a stablecoin regime by 2026.
“Our objective remains to support innovation and build trust in this emerging form of money. We’ve listened carefully to feedback and amended our proposals for achieving this, including on how stablecoin issuers interact with the Bank of England. These proposals are fit for a future where stablecoins play a meaningful role in payments, giving the industry the clarity it needs to plan with confidence.”
Teresa Cameron, Group CEO of Clear Junction, said the consultation confirms what responsible financial firms have been preparing for: a clear regime for asset-backed digital currency. Cameron noted that holding limits and oversight were necessary if stablecoins were going to play a meaningful role in payments and transfers.
“As an FCA-authorised e-money institution serving financial institutions, Clear Junction’s role is to provide the regulated correspondent infrastructure that underpins these developments – secure accounts, resilient access to UK and EU payment systems, and compliant bridges between traditional money and tokenised value. Regulatory clarity supports this model and helps ensure that innovation in digital money scales on foundations that are stable, supervised and trusted.”
In the US, the concept of a retail CBDC has lost any palpable momentum, as concerns about privacy and government abuse have shifted policy toward regulated stablecoin by private issuers. Recent legislation outlining oversight and requirements is expected to drive a boom in dollar-based stablecoins and increase demand for dollars worldwide.
The Bank and the FCA expect to publish a joint approach document in 2026 to clarify how rules will apply in practice. The consultation is open and accepting feedback until February 10, 2026.