The Bank of England consults its rules for systemic stablecoins

On November 10, 2025, the Bank of England opened a consultation on British rules for systemic stablecoins denominated in pounds. It proposed reserves, redemption, resolution plans and temporary holding limits. The consultation was not a final rule and only covered tokens whose use in payments could be relevant to financial stability.

Two supervisors depending on function and scale

British design divided powers. The Financial Conduct Authority would regulate issuers and custodians within the general cryptoasset regime. When a stablecoin or its payment system were recognized as systemic by the Treasury, the Bank of England would assume prudential supervision of that infrastructure and the corresponding issuer.

The border did not depend on the token using a specific blockchain. Volume, number of users, interconnection and consequences of an interruption mattered. A stablecoin used primarily to trade cryptoassets could remain under the FCA; Whatever became a daily means of payment could enter the Bank’s perimeter.

The consultation sought to avoid an abrupt jump between regimes. A growing issuer needed to know when it would be considered systemic, what additional requirements would appear, and how supervision would be transferred. Without coordination, the same expansion that demonstrates adoption can create regulatory uncertainty.

Reserves and access to the central bank

The Bank proposed that the reserves combine unremunerated deposits at the central bank itself with short-term British public debt. Keeping a portion in central bank money reduces credit risk and facilitates repayments; Liquid securities allow operating costs to be covered. The composition tried to balance security, liquidity and viability of the model.

The holder would have a legal claim to redeem the stablecoin for its face value in pounds. This obligation did not convert the token into a ticket or an insured deposit. The issuer remained responsible for redemption, and the reserve structure had to function also during stress or insolvency.

The proposal required recovery and resolution plans. If the issuer stopped operating, authorities needed to preserve information, protect reserves and return value without paralyzing the payments system. The keys, technology providers and custody contracts had to be transferable or replaceable.

Temporary tenure limits

The consultation raised individual and business limits during an initial phase. Its purpose was to prevent a rapid migration from bank deposits to stablecoins from disorderly reducing banks’ financing. They were not presented as a permanent ban, but rather as a temporary measure while the market matured.

Applying them involved challenges. A user can distribute funds between multiple wallets and providers; The issuer needs to identify related holdings without disproportionately collecting data. There should also be exceptions for companies with legitimate business needs and mechanisms that avoid blocking incoming payments for unforeseeable reasons.

The limits alone did not resolve the risk of bank exit. Remuneration design, ease of use and confidence in redemption influence demand. The Bank had to review the measure with real data and explain when it could be relaxed.

What it meant for issuers and users

For an issuer, reaching systemic scale would bring requirements comparable to critical financial infrastructure: resilience, governance, data, continuity and supervisor access. The technological promise of permanent settlement had to coexist with maintenance windows, incidents and the ability to stop illicit movements.

For the user, the regulated label did not eliminate price risk against other currencies or fraud from the intermediary from which the token was acquired. It was essential to know who was issuing, what entity was custodian, and whether the stablecoin had already been recognized as systemic or continued under the FCA regime.

Outlook from 2026

After closing the consultation in February 2026, the Bank published its policy positions and a draft Code of Practice in July. It maintained the redemption claim and announced that it intends to finalize the code by the end of 2026, with additional materials during 2027.

Subsequent developments confirm that November was a consultative phase. As of August 2026, the draft has not yet to be presented as a fully applicable regime. The address is defined, but systemic issuers will be subject to the final code and the formal act of recognition.