The Bank of England has unveiled new rules for stablecoins and allowed for exemptions from limits.
Date: 2025-11-11 Author: Henry Casey Categories: IN WORLD
The Bank of England (BoE) has published a consultation paper outlining plans for a future regulatory framework for pound-denominated stablecoins. The aim of this initiative is to strengthen trust in digital money and ensure the resilience of the UK financial system.
As part of the proposed rules, the BoE confirmed its intention to impose limits on stablecoin ownership, but agreed to a number of exemptions. According to the document, individuals will be able to hold up to £20,000 in systemically important stablecoins, while businesses will be able to hold up to £10 million. However, retail businesses and crypto exchanges serving large customer flows will be able to avoid these restrictions.
Central Bank Governor Andrew Bailey noted that the new policy is aimed at ensuring that digital forms of money inspire the same trust in citizens as traditional ones. He emphasized that regulated stablecoins can make payments faster and cheaper, facilitating international transactions.
Bailie also added that the BoE is working to create a "multi-currency" financial architecture where stablecoins, bank deposits, and central money will coexist while maintaining the resilience of the entire system.
According to the regulator's proposal, issuers of systemically important stablecoins will be required to hold at least 40% of their reserves in non-interest-bearing deposits at the Bank of England itself, with the remainder in short-term government bonds. Companies in the transition to systemic status will be allowed to temporarily hold up to 95% of their reserves in government securities, allowing them to maintain liquidity and flexibility.
Furthermore, the BoE is considering the introduction of central bank liquidity mechanisms that would allow issuers to convert assets into cash if necessary.
Deputy Chair of Financial Stability Sarah Breeden emphasized that the regulator's goal is to support innovation and build trust in new forms of digital money. She stated that, after receiving feedback from market participants, adjustments were made to make the system more balanced.
The bank also intends to ensure interoperability between stablecoins, tokenized bank deposits, and fiat currencies. This objective will be achieved through the new Retail Payments Infrastructure Board, which will develop the retail payments infrastructure in the UK.
The final regulation will come into force in 2026 and will apply only to UK stablecoins designated by the Treasury as systemically important. Other cryptoassets will remain under the supervision of the Financial Conduct Authority (FCA).
Riccardo Tordera-Ricchi, Policy Director at The Payments Association, welcomed the BoE's willingness to accommodate exceptions, although the association remains opposed to the introduction of limits. He stated that the regulator's flexible approach demonstrates a desire to encourage innovation without penalizing market participants.
