UK launches systemic stablecoin rules, sets £40bn guardrail
The Bank of England has published its policy statement and draft Code of Practice for systemic stablecoin issuers. This framework establishes the UK's stablecoin regime, supporting safe innovation and trusted digital money.
Revised rules for asset backing and issuance
Following extensive stakeholder engagement, the Bank of England has revised its proposals for systemic stablecoins.
The maximum share of backing assets held in interest-bearing short-term UK government debt has increased from 60 percent to 70 percent, with the remainder in central bank deposits.
This adjustment aims to support more viable business models while ensuring prompt redemptions and managing outflows.
Furthermore, the Bank will implement temporary issuance guardrails, initially set at £40 billion for each systemic stablecoin, instead of temporary holding limits.
This approach achieves the same policy outcome more efficiently, allowing unrestricted use by households and businesses, and will be regularly reviewed.
Innovation thrives on trust
The new framework is designed to foster safe innovation, enabling UK-issued stablecoins to evolve into trusted forms of digital money.
These digital currencies could facilitate faster, cheaper, and more flexible services for users, including enhanced cross-border transactions and new programmable functionalities.
The policy statement and draft rules incorporate feedback from last year's consultation, providing clarity for innovators to scale within a robust framework.
The Bank is collaborating closely with the Financial Conduct Authority (FCA) to establish a comprehensive, end-to-end regime, including a managed transition process for firms.
A world-leading regime takes shape
This framework provides much-needed clarity for the UK's digital currency ambitions, balancing innovation with financial stability.
The pragmatic adjustments to asset backing and guardrails demonstrate responsiveness to industry feedback, fostering a more viable ecosystem.
While implementation details with the FCA are still pending, this move positions the UK at the forefront of systemic stablecoin regulation.