UK: BoE finalises systemic stablecoin regime

Why should I read this?

On 22 June 2026, the Bank of England (BoE) published its policy statement on the regulation of systemic stablecoin issuers, setting out final policy positions and consulting on a draft Code of Practice (CoP) for sterling-denominated systemic stablecoin issuers. The consultation element of the policy statement closes on 22 September 2026 and the BoE intends to finalise the CoP by end 2026.

The most material changes when compared to the initial consultation paper for issuers are the revised 70/30 backing asset model, removal of proposed individual and business holding limits, a temporary £40 billion issuance guardrail per systemic stablecoin, a prohibition on payment of interest to coinholders and a proposed central bank liquidity facility.

See our previous briefing “Bank of England consult on regulations for systemic stablecoins” for more details.

What should I do?

All firms considering issuing sterling-denominated stablecoins should review the requirements, given that successful adoption is likely to lead to them becoming systemic. Specifically, such firms should:

• model the economics of the 70/30 backing asset model, including the unremunerated 30% central bank deposit requirement, T-Bill yield assumptions, reverse repo income and the cost of capital and reserves;
• assess whether the (initial) £40 billion temporary issuance guardrail, direct payment system access expectation and UK subsidiarisation requirement affect launch structure, scaling plans and group booking model;
• review existing or proposed redemption, liquidity and operational arrangements against the requirement to redeem at par within 24 hours of a full redemption request, with no suspension right; and
• identify issues for the BoE consultation response, including backing asset calibration, the liquidity facility, trust arrangements, public ledger use and transition between the FCA (non-systemic) and BoE (systemic) regimes.

What else do I need to know about the systemic stablecoin regime?

Backing assets

Issuers may hold up to 70% of backing assets in short-term UK government debt securities with a residual maturity of up to six months. At least 30% must be held as unremunerated deposits at the BoE. This improves issuer economics compared with the consulted 60/40 model, but the 30% cash requirement will still pose issues from a revenue given that amounts deposited at the BoE for these purposes will not attract interest. Backing assets will be held on statutory trust.

Commercial bank deposits and broader asset classes will not be eligible backing assets. The justification for this is that the BoE is seeking to avoid redemption pressures at stablecoin issuers triggering rapid withdrawals from safeguarding banks and increasing interconnectedness between systemic firms. This has been informed, to no small degree, by experiences during the collapse of Silicon Valley Bank.

Issuers will be permitted to use overnight repo and reverse repo using sterling-denominated UK government debt securities, provided that they maintain one-to-one backing at all times.

Temporary issuance guardrail

The BoE has dropped its proposals to limit the amount of stablecoins which could be held by individuals and businesses (the proposed limits had been £20,000 and £10 million, respectively). Instead, each systemic stablecoin product will initially be subject to a temporary £40 billion issuance guardrail, with no limits on the size, frequency or type of transaction or holdings by users.

The guardrail is intended to mitigate risks to credit provision and is expected to be loosened and ultimately removed once the BoE is satisfied those risks have been addressed.

Capital and reserve requirements

Capital requirements will be based on the CPMI-IOSCO Principles for Financial Market Infrastructures. The minimum requirement will be the higher of six months’ relevant operating expenses or the costs of executing the issuer’s recovery and orderly wind-down plan, excluding costs covered by the wind-down reserve.

Capital must be equivalent in quality to Common Equity Tier 1 (CET1) which banks and investment firms must hold, and issuers must notify the BoE if their capital resources fall below 110% of the minimum requirement.

Issuers must also hold liquid reserves on statutory trust to cover financial risks in the backing asset pool and to protect coinholders in insolvency or wind-down.

Issuance, legal claim and redemption

Systemic stablecoins must be issued in exchange for money. Coinholders must have a robust legal claim for the face value of their stablecoins against the issuer and must be able to redeem directly with the issuer at any time.

Issuers must process redemptions as soon as practicable and in any event within 24 hours of receiving a full redemption request, after completion of AML and KYC checks and receipt of the stablecoins in the issuer’s wallet.

Suspension of redemptions will not be permitted. Redemption fees can be charged, but must be fair, transparent and proportionate and must not be deducted from the redemption payment without the coinholder’s express agreement.

Interest or income must not be paid to coinholders. There will be no FSCS coverage for coinholders.

Payment system access

The BoE expects systemic stablecoin issuers to have direct access to payment systems rather than relying on sponsoring participants. This may be a significant implementation issue for new entrants and for firms which had intended to rely on bank-sponsored models.

Step-up approach for “systemic at launch” issuers

Issuers recognised by HMT as systemic at launch may hold up to 95% of backing assets in sterling-denominated UK government debt securities as they scale, reducing to the 70% limit once appropriate. This should improve launch economics for firms recognised as systemic before reaching scale.

Central bank liquidity facility

The BoE intends to introduce a short-term collateralised lending facility for systemic stablecoin issuers, secured against sterling-denominated UK government debt. This will act as a liquidity backstop for otherwise solvent issuers, not a substitute for one-to-one backing or a remedy for balance sheet insolvency. Further details are expected in 2027.

 

For non-sterling-denominated systemic stablecoins issued outside the UK, the BoE will defer to the home authority’s regulatory framework, provided it delivers similar outcomes to the BoE’s own requirements, in particular:

• coinholders must have a robust legal claim for the value of their stablecoins against the issuer and issuers must honour redemption requests on demand at the face value of the stablecoins without undue constraint or cost;
• redemptions must take place in a timely manner; and
• stablecoins must be fully backed at all times with highly liquid assets.

The BoE does not consider “multi-issuance” models, in which multiple entities in different jurisdictions issue fungible stablecoins, to be suitable for systemic use in the UK. Its preference is for single-issuance models backed by a single reserve.

Non-UK issuers of sterling-denominated systemic stablecoins

Non-UK issuers of sterling-denominated systemic stablecoins must establish a UK subsidiary and hold backing assets in the UK.

Implications of the policy statement

The BoE’s framework is more conservative than some overseas regimes, particularly the US. The combination of factors including the need to hold 30% of backing assets in unremunerated central bank deposits, a prohibition on the payment of interest to coinholders, 24-hour redemption and direct payment system access means that issuers will need to think hard about whether and how they can issue sterling-denominated stablecoins. The regime is likely to favour well-capitalised issuers, bank-backed models or firms with strong ancillary revenue streams over pure new entrants, while leaving scope for more targeted payment or loyalty-based stablecoin propositions.

Timothy Fosh, partner in Financial Services, comments:

“The Bank of England has helpfully rowed back on some of the more extreme suggestions in its original consultation, such as the limits of the value of stablecoins which a person will be permitted to hold. It has clearly listened to what was some quite loud feedback from the market. Some of its positions remain relatively restrictive for issuers when compared with other regimes internationally, but the focus on protection and measures such as the liquidity backstop mean that there will be a chance for sterling-denominated stablecoins to become more widely adopted.”

Next steps

The consultation on the draft CoP closes on 22 September 2026. The BoE intends to finalise the CoP by the end 2026, after which it can be applied to recognised systemic stablecoin issuers.

The BoE expects to consult in 2027 on further materials to support the regime. These include draft guidance on the CoP, updates to the Recognised Payment Systems Code of Practice, and a consultation on backing asset trust arrangements and distribution rules. The BoE will also publish a statement of policy on its supervisory powers over systemic stablecoin issuers.

The BoE and FCA intend to publish a joint document setting out how the two parts of the UK stablecoin regime will operate together. This will cover the recognition process, the transition to joint regulation, and how the rules across both authorities will interact.

How we can help

We offer specialised advice on the regulation of stablecoins, cryptoassets and digital payments. Our services include guidance on regulatory compliance for stablecoin issuers, custody models and infrastructure, and the interaction between BoE and FCA requirements. We support issuers, wallet providers and trading platforms with the design and implementation of regulatory frameworks. Our team can assist with responding to the BoE’s consultation on the draft CoP and preparing for the implementation of the new regime.