Key Takeaways
- The Bank of England plans to roll out a stablecoin regulatory framework by the end of 2026, aligning closely with US standards.
- The central bank will open a consultation on November 10 to refine rules governing assets backing digital currencies.
- Officials hope the move will strengthen financial stability and attract stablecoin issuers amid global competition.
The Bank of England (BOE) is preparing to introduce a comprehensive regulatory regime for stablecoins by the end of 2026. The central bank aims to bring its approach in line with the United States as both nations seek to safeguard financial stability in the expanding digital asset market.
BoE Eyes Finalizing Stablecoin Rules By 2026 End
According to people familiar with the discussions, the BOE will launch a consultation process on November 10 to gather views on how to regulate stablecoins—cryptocurrencies pegged to traditional currencies such as the US dollar or British pound. The central bank’s proposed framework is expected to mirror the US model, particularly regarding the assets used to back the coins.
The move follows growing global debate over the future of digital money, with policymakers warning that inconsistent regulation could trigger market risks. The Financial Stability Board (FSB), chaired by BOE Governor Andrew Bailey, recently cautioned that “gaps and inconsistencies” in national rules could open the door to regulatory arbitrage and potential crises.
One person close to the matter said UK authorities plan to ensure that stablecoins are backed by short-term government debt: either Treasury bills or bonds with maturities of three months or less, which is similar to US requirements. The BOE also intends to allow a significant portion of these backing assets to earn interest, a measure expected to boost demand for British government securities, according to a Bloomberg report.
The UK Treasury has reportedly pressed the central bank to accelerate its plans amid concerns that London risks falling behind Washington’s rapid progress. During a panel at the IMF and World Bank meetings in Washington, Katharine Braddick, head of strategic policy at Barclays and a former Treasury official, said:
“We are about to experience a period of probably swifter policy development and regulatory development and strategic policy work, certainly on the UK end. The US is really setting us a challenge with the pace and ambition and scope of what they’re trying to achieve.”
Despite past caution from Governor Bailey, officials now believe the UK can keep pace with the US rollout. Some insiders even suggest the UK could finalize its rules before American legislation takes full effect.
Current Regulatory Situation For Stablecoins
However, industry concerns persist over proposed caps on stablecoin holdings; currently set at £20,000 for individuals and £10 million for businesses. BOE Deputy Governor Sarah Breeden said the limits will be reviewed once the risk of a rapid shift of deposits from banks to stablecoins diminishes. She also confirmed that exemptions will apply to certain large companies.
Bailey has recently adopted a more measured tone toward the sector, signaling that the BOE’s approach will balance innovation with prudence. As global enthusiasm for stablecoins intensifies, the UK is racing to craft a framework that both supports digital finance and protects its financial system.
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