The Bank of England has published draft rules governing systemic sterling stablecoin issuers, marking what officials describe as a significant step toward bringing regulated stablecoins into the UK financial mainstream. The policy statement, issued 22 June 2026, revises proposals first consulted on in late 2025, removing individual holding limits, increasing the proportion of reserves issuers may hold in interest-bearing assets, and introducing a temporary £40 billion issuance cap per systemic stablecoin in place of per-wallet ownership restrictions.
The framework is designed to allow regulated sterling stablecoins to operate in the UK from 2027, subject to industry feedback by 22 September 2026 and a finalised Code of Practice expected by year-end. Industry reaction has been mixed: while the removal of individual holding limits received near-universal support, the revised framework’s remaining restrictions, particularly a requirement that 30 per cent of reserve assets be held in non-interest-bearing central bank deposits, have drawn criticism from fintech and payments executives who argue the UK risks falling behind other jurisdictions.
The matter is relevant to payment service providers, cross-border businesses, stablecoin issuers and policymakers across jurisdictions where comparable stablecoin regimes, including the United States, the European Union and Singapore, are also being developed or implemented.
What Changed in the Bank of England’s Framework
The Bank’s June 2026 policy statement revised three core elements of its earlier consultation proposals. First, the Bank abandoned plans to impose temporary holding limits restricting how much stablecoin an individual or business could own, replacing them with a temporary issuance guardrail capping each systemic stablecoin at £40 billion in total circulation. According to the Bank, this approach delivers a comparable policy outcome of protecting credit provision while being simpler to implement and avoiding restrictions on use by households and businesses.
Second, the Bank increased the maximum proportion of backing assets that issuers may hold in short-term UK government debt from 60 per cent to 70 per cent, with the remaining 30 per cent required to be held in non-interest-bearing deposits at the Bank of England. Third, the Bank and the Financial Conduct Authority confirmed they are developing an end-to-end regulatory regime, including a managed transition pathway for firms moving from non-systemic to systemic status, with further detail expected alongside the FCA’s final rules.
How the Regulatory Process Will Unfold
Sarah Breeden, Deputy Governor for Financial Stability at the Bank of England, described the framework as “a major milestone in delivering greater choice and innovation in UK payments,” stating that the regime establishes foundations of trust for a new form of money through prompt redemption, strong protections and central bank support. The consultation period on the draft Code of Practice runs until 22 September 2026, after which the Bank intends to finalise rules by year-end, with regulated stablecoins expected to become operational in the UK from 2027.
Key Factors Shaping Industry Response
Parliamentary Support
The Crypto and Digital Assets All-Party Parliamentary Group offered unconditional endorsement of the revised framework. Co-Chairs Lord Vaizey of Didcot and Gurinder Singh Josan CBE MP stated that the original proposed limits had risked putting the UK out of step with international markets, and welcomed the Bank’s willingness to adapt its approach following industry and parliamentary feedback, framing the decision primarily in terms of international competitiveness relative to the US, EU and other jurisdictions.
Payments Industry: Cautious Optimism
Payments and cross-border infrastructure executives described the changes as broadly positive but operationally measured. Kristaps Zips, UK CEO at payabl, characterised the shift from per-wallet caps to an issuer-level limit as giving UK businesses room to build with confidence, while positioning stablecoins as complementary to, rather than a replacement for, existing payment rails such as cards and correspondent banking. Sam Coyne, Europe CEO at Currenxie, focused on potential benefits for small and medium-sized enterprises facing high foreign exchange costs on cross-border payments. Justin Jacobs, Chief Policy and Engagement Officer at Pay.UK, cautioned that the framework’s success will depend on integration with existing payment infrastructure rather than the creation of parallel systems, and called for fraud prevention and dispute resolution rules to be built into digital money infrastructure from the outset.
Fintech Sector: Competitiveness Concerns
Industry body Innovate Finance offered more critical commentary. Chief executive Janine Hirt warned that despite positive revisions, the framework risked becoming the most conservative stablecoin regime among major jurisdictions, citing the 30 per cent non-remunerated central bank deposit requirement as removing a substantial share of potential revenue for issuers and service providers. Hirt also argued the £40 billion issuance guardrail could constrain UK plans for wholesale capital market tokenisation and increase the risk of dollarisation if sterling stablecoin issuance is discouraged relative to dollar alternatives.
Mark Fairless, CEO of ClearBank, and Nigel Brook-Walters, Chief Revenue Officer at CoinPayments, raised similar concerns regarding commercial viability and the UK’s position as the only major jurisdiction proposing an issuance limit on stablecoins denominated in its own currency, with Brook-Walters noting that the framework has moved from uncompetitive toward viable, though not yet what he characterised as fully compelling.
Risks and Limitations
The framework remains in draft form, with the consultation period open until 22 September 2026 and final rules not expected until year-end, meaning the specific provisions discussed, including the 30 per cent deposit requirement and £40 billion issuance cap, could be revised before implementation. Industry commentary cited throughout reflects the stated positions of company executives and trade bodies, which may carry commercial interest in shaping the framework’s final form, rather than independent regulatory or academic assessment. Additionally, several commentators noted that broader questions regarding stablecoin custody, key management, interoperability with existing payment systems and consumer protection in cases of technical failure remain unresolved within the current draft framework, irrespective of the specific reserve and issuance provisions under debate.
Future Outlook
Industry stakeholders broadly agree that the UK needed to act on stablecoin regulation and that the 2027 implementation timeline provides the market with useful visibility, though disagreement persists over whether the framework’s remaining restrictions, particularly the central bank deposit requirement and issuance cap, will be sufficient to attract international issuers relative to comparable regimes in the United States, European Union, Singapore and elsewhere. Several commentators noted that the regulatory provisions represent one component of a broader set of unresolved questions concerning interoperability, settlement infrastructure and public trust that will shape whether sterling stablecoins achieve meaningful scale, irrespective of the framework’s final calibration.
Conclusion
The Bank of England’s revised stablecoin framework represents a substantial shift from its original 2025 consultation proposals, removing individual holding limits that drew broad industry and parliamentary criticism while introducing a temporary supply-side issuance cap and revised reserve requirements. Industry reaction reflects general support for the direction of the policy alongside continued debate over whether the remaining restrictions, particularly the 30 per cent non-remunerated deposit requirement, position UK-issued sterling stablecoins competitively relative to international alternatives. The outcome of the consultation period closing 22 September 2026 will determine the framework’s final form ahead of the planned 2027 implementation.
