The Bank of England has posted an update on draft rules regarding stablecoins. The bank stated:
“[This] marks a significant milestone in delivering a comprehensive UK regime for stablecoins. It sets a clear pathway for UK-issued, sterling-denominated stablecoins to operate at scale across a range of retail and wholesale use cases.”
Stablecoins are privately issued digital currency which are typically tied to fiat currency.
The bank said that users should be able to transfer value using a variety of options which include traditional bank deposits, tokenized ones, stablecoins and, perhaps CBDCs [central bank digital currency].
In general options provided to the public should fuel competition and thus provide better services.
While in the US, CBDCs are on the way to being banned, due to extensive privacy and abuse concerns, elsewhere, CBDCs are still up for discussion with the EU heading to issue one and the Chinese already offering a digital yuan.
The Bank of England says that there may be a “complimentary role” for stablecoins alongside commercial bank money in wholesale markets
Further updates are said to be coming soon.
The draft includes requirements for reserves.
There is a a “Temporary guardrail” on the level of issuance per systemic stablecoin which has been set at £40 billion.
The bank said they have listened to the feedback provided by interested parties and have made “substantive changes.”
The bank differentiates between systemic stablecoins, largely used for payments, and non‑systemic stablecoins. Both will be regulated by the Bank and the FCA.
The draft is open for public feedback with the deadline being September 22, 2026.
Coinbase, a player in the stablecoin market, issued a stamp of approval for the update as shared by Paul Grewal, Chief Legal Officer at Coinbase. He stated on X that “We pushed for clear, workable rules and the UK delivered: no more wallet limits, simpler reserve requirements and recognized US oversight for foreign stablecoins. We are going to see more and more clarity around stablecoins globally.”
Dollar based stablecoins currently dominate the sector of digital assets led by Tether (USDT) and USDC with hundreds of billions outstanding. Pound based stablecoins are currently almost non-existent.