The Bank of England has loosened parts of its proposed framework for sterling stablecoins after concerns that the original approach could hinder the development of the early-stage market.
The central bank, which is preparing rules for sterling-backed stablecoins intended for broad use in retail payments, has dropped an earlier plan to restrict how much individuals could hold.
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Instead, it now proposes a cap on the overall amount issued by each stablecoin, with the initial limit set at £40bn ($52.8bn).
It has also eased its approach to reserve assets. Under the revised proposal, issuers of widely used stablecoins would be allowed to place up to 70% of their backing assets in short-term government debt, up from the 60% previously proposed.
The balance would need to remain in non-interest-bearing deposits at the central bank.
Stablecoins are digital tokens designed to maintain a fixed value, typically by being linked to a fiat currency and supported by conventional assets such as government securities.
In the UK, regulation in this area remains limited and is mainly centred on anti-money laundering requirements and financial promotions. That contrasts with the European Union, where the broader MiCA framework has applied since December 2024, though it is now under review.
Bank of Englanddeputy governor for financial stability Sarah Breeden said: “This is a major milestone in delivering greater choice and innovation in UK payments. Innovation thrives on trust. And today we’ve set out the foundations of that trust for a new form of money – with prompt redemption, strong protections and central bank support. This is truly a world leading regime.”
The Bank of England said it will take feedback on the proposals until 22 September 2026 and aims to complete the Code of Practice by the end of that year.
Additional supporting documents are expected later, alongside ongoing joint work with the Financial Conduct Authority (FCA).
The changes would allow regulated stablecoins to begin operating in the UK from 2027.
