The Bank of England has released a policy statement and draft Code of Practice that set out rules for systemic stablecoin issuers, marking a decisive step toward a regulated sterling‑denominated digital currency market.
Key provisions reshape issuance limits and reserve composition
The updated framework drops the individual holding caps that had been proposed in an earlier draft. Instead, the regulator introduces a temporary issuance guardrail of £40 billion for each systemic stablecoin product. Officials say the guardrail will be reviewed regularly and may be removed once risk concerns are addressed.
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Reserve‑asset rules have also been softened. Where issuers were once required to keep 60 % short‑term gilts and 40 % central‑bank deposits, the new policy permits up to 70 % gilts, with the remaining 30 % in non‑interest‑bearing deposits. A 95 % step‑up allowance lets newly recognised systemic firms hold most of their reserves in gilts during the early scaling phase.
Other mandatory features include on‑demand redemption at face value within 24 hours, dual statutory trusts to protect coinholders and cover administrative costs, and an emergency liquidity facility that lets solvent issuers pledge gilt holdings to the central bank.
Commercial implications for fintech and cross‑border payments
Fintech executives, payment service providers and institutional desks in both the United States and the United Kingdom see the release as a signal that a regulated stablecoin regime could go live in 2027. By removing per‑wallet limits, the BoE aims to make tokenised cash cheaper and simpler to integrate, reducing the operational burden on platforms that previously would have needed to enforce strict caps.
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The higher gilt allocation is expected to improve the yield on the float, but the mandatory 30 % deposit drag still imposes a cost that could affect profitability.
Historically, the UK has been quicker to adapt its financial‑services rules to emerging technologies, but the current framework is more restrained than some earlier proposals. The shift from per‑user limits to a product‑wide cap suggests a willingness to balance market growth with systemic risk concerns, a pattern seen in previous digital‑currency pilots.
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