Bank of England announces plans to regulate Sterling stablecoins

The Bank of England (BoE) has announced a new consultation paper outlining how it plans to regulate systemic stablecoins – digital currencies designed to maintain a stable value against the pound sterling.

The proposals, which were published on November 10th, aim to make stablecoins reliable enough to be used for everyday payments and protect the wider economy.

What is systemic stablecoin?

Stablecoins (also called stable coins) are digital tokens with a fixed value that is linked to traditional currencies like the pound or other assets, such as government securities. They are known as Systemic when they become large or widely used enough that any failure could affect the UK’s financial system – similar to how major banks are regulated.

According to the Bank of EnglandThis move is “a significant step” in preparing for an era where traditional and digital money will coexist and give consumers and businesses more options to pay.

The paper contains several new rules that will ensure that stablecoins are safe and reliable.

• Stablecoins issuers have to hold assets which guarantee the coin’s value. The UK government can invest up to 60% of the assets in short-term debt. The rest of the assets must be kept in cash at a Bank of England.
• New issuers have more flexibility: Stablecoin systemic issuers can temporarily hold government debt up to 95 percent, which helps them stay stable in the early stages of growth.
• Emergency support: The Bank is considering offering liquidity arrangements – essentially short-term loans – during financial stress to prevent sudden failures.
• Holding limits: To protect the broader economy, individuals could be limited to £20,000 per stablecoin, and businesses to £10 million. Exemptions could be granted to larger firms. These limitations would only be in place until the market matures.

Joint regulation with FCA

Financial Conduct Authority (FCA) will continue to oversee non-systemic (smaller) stablecoins.
When a stablecoin changes its value SystemicIt would be under the Bank’s remit while the FCA continues to take care of consumer protection.

A joint BOE–FCA document, expected in 2026, will clarify how the two authorities will coordinate oversight.

Why this is important for UK expats, digital investors and other stakeholders

This marks a major turning point for British expats who use digital currencies overseas. A regulated stablecoin backed by the Bank of England could offer a safer, pound-linked digital payment option – ideal for transferring funds between the UK and Europe without relying on volatile cryptocurrencies.

Sarah Breeden, the BoE’s deputy governor for financial stability, stated that “the goal is to support innovation and build confidence in this emerging type of money.”

• Consultation runs until 10 February 2026
• After reviewing responses, Bank plans to release final Codes of Practice by 2026. These will set official rules for stablecoins.
• The framework may pave the path for a UK Digital Pound in the future.

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