Bank of England Publishes Consultation on Systemic Stablecoins Regime, UK, November 2025

The Bank of England published consultation paper "Proposed regulatory regime for sterling-denominated systemic stablecoins" on 10 November 2025. The consultation closed on 10 February 2026. The Bank will use responses to inform Codes of Practice, which it plans to consult on and finalise later in 2026. The Bank published this consultation in its role as prudential regulator for payment systems recognised as systemically important under the Banking Act 2009.

The statutory basis for the consultation lies in the Financial Services and Markets Act 2023, which expanded the Bank's regulatory remit to cover digital assets. Under that Act, HM Treasury may recognise a payment system or a service provider as systemic if any deficiencies in its design or operation would threaten the stability of, or confidence in, the UK financial system. Once HM Treasury recognises an entity, it falls under the Bank's powers under the Banking Act 2009. Stablecoin issuers not deemed systemic remain under Financial Conduct Authority solo supervision.

The consultation paper sets out the following key proposals for systemic stablecoin issuers. On backing assets: issuers may hold up to 60% of backing assets in short-term UK government debt; the remaining 40% must be placed in unremunerated accounts at the Bank of England. Issuers recognised as systemic at launch or transitioning from the FCA regime may initially hold up to 95% in UK government debt to support viability as they grow. The Bank also proposes central bank liquidity arrangements to provide a backstop in times of stress. On holding limits: temporary limits of £20,000 per individual and £10 million per business apply to mitigate risks to credit provision, with an exemptions regime for larger businesses; these limits would be removed once transition risks subside. Limits do not apply to stablecoins used in the Bank and FCA's Digital Securities Sandbox for wholesale financial market settlement.

The regulatory structure applies jointly to the Bank and the FCA. The Bank oversees prudential and financial stability risks for systemic issuers. The FCA retains responsibility for conduct and consumer protection for all issuers, systemic or non-systemic. The Bank and the FCA committed to publish a joint approach document in 2026 to clarify how their rules apply in practice and to support smooth transitions between regimes. Stablecoins used only for buying and selling unbacked cryptoassets fall outside the Bank's regime and remain under FCA solo regulation.

Prokopiev Law Group advises on digital asset regulatory matters and stablecoin compliance across UK and cross-border jurisdictions, and maintains a dedicated partner network for systemic payment system issues. Firms seeking guidance on Bank of England recognition processes, backing asset requirements, or FCA-to-Bank regime transitions are welcome to contact us. Our work in this area covers: stablecoin issuer authorisation, systemic recognition applications, prudential compliance for payment systems, Bank of England regulatory engagement, FCA cryptoasset supervision, and Digital Securities Sandbox participation.

Source: Bank of England, Consultation Paper, "Proposed regulatory regime for sterling-denominated systemic stablecoins," published 10 November 2025, https://www.bankofengland.co.uk/paper/2025/cp/proposed-regulatory-regime-for-sterling-denominated-systemic-stablecoins (confirmed 1 April 2026).

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