UK Edges Forward on Stablecoin Rules as Others Race Ahead

The proposals, open for consultation until February 2026, will culminate in formal Codes of Practice later that year.

The approach mirrors prudential standards under the Banking Act 2009, with the Bank prioritizing financial stability over innovation. Its goal is to ensure that widely used stablecoins, those deemed 'systemic,' can be safely integrated into everyday payments without amplifying systemic risk.

Restricted investment 

Among the key proposals are limits on holdings: £20,000 ($26,340) per coin for individuals and £10mn for corporations. The caps may be lifted once the Bank deems stablecoin use to pose no threat to “the real economy.”

Large corporations will be exempt from the outset, and wholesale activity within the Digital Securities Sandbox, run jointly with the Financial Conduct Authority, will not face the same limits.

Systemic issuers must maintain transparent, conservative reserves. Up to 60% of backing assets may be held in short-term UK government debt, initially rising to 95% during the rollout phase. The remainder must sit in non-interest-bearing accounts at the Bank of England, ensuring clear separation from commercial banking risk.

Officials are also weighing a liquidity backstop that would give issuers access to emergency funding during market stress, reflecting lessons learned from the banking sector’s own crisis planning.

Too slow? 

While the Bank’s caution underlines its intent to safeguard stability, critics see the timeline as sluggish. The consultation runs until early 2026, with implementation not expected before the following year, by which time other jurisdictions may have moved ahead.

The EU’s MiCA regime is already operational, and in the US, both regulators and market players are testing large-scale issuance models. London’s deliberate pace may reassure policymakers, but it risks leaving the UK as a spectator in the global stablecoin race.