The Bank of England is pushing for a worldwide standard for stablecoin regulation. They say that different rules in different countries could give bad issuers a way into the financial system. The call comes as the UK moves closer than ever to finalizing its own domestic framework, with final rules expected by the end of 2026.
A Global Problem That No Single Country Can Fix
Stablecoins do not respect borders. A digital coin issued in one jurisdiction can circulate in payment systems worldwide within seconds, which is precisely why the Bank of England believes no country can regulate this space alone. Through its role chairing the Financial Stability Board (FSB), BoE Governor Andrew Bailey has repeatedly flagged the danger of regulatory arbitrage, the risk that issuers will simply migrate to whichever country imposes the lightest rules.
The Bank of England’s own consultation paper, which came out on November 10, 2025, directly addressed this issue. Divergence between the UK’s proposed rules and those of other major jurisdictions, it noted, could create operational difficulties for stablecoin issuers with cross-border businesses.
That is a candid admission: design rules that are too far out of step with Washington, Brussels, or Singapore, and global issuers may simply not bother scaling in the UK.
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What the Bank of England Is Actually Proposing
The BoE’s consultation set out a tiered regulatory architecture. Stablecoins deemed systemically important, those recognized by HM Treasury as posing risks to UK financial stability, would fall under joint oversight from the Bank and the Financial Conduct Authority (FCA).
On the reserve side, systemic issuers would be required to hold at least 40% of their backing assets as unremunerated deposits at the Bank of England, with up to 60% placed in short-term UK government debt.
Issuers scaling up from a smaller base would initially be permitted to hold up to 95% in government bonds to support commercial viability. The BoE is also exploring central bank liquidity arrangements to backstop issuers during periods of stress.
Temporary holding caps are also on the table: £20,000 per coin for individuals and £10 million for businesses, with an exemptions regime for large corporate users. The bank says these limits would be removed once deposit outflow risks to the wider banking sector have been properly assessed and managed.
Industry Is Divided
Not everyone sees the BoE’s proposals as a sensible baseline. Aave founder Stani Kulechov described the individual holding cap as absurd on X, arguing that on-chain stablecoins do not pose the kind of systemic risk the bank is guarding against. Law firm Slaughter and May went further, warning that the BoE’s thinly veiled concerns about public permissionless ledgers, combined with onerous reserve and capital requirements, could make UK systemic stablecoin issuance commercially unviable altogether.
On February 25, 2026, FCA entered the fray by announcing that it had chosen four firms, including Revolut, Monee Financial Technologies, ReStabilise, and VVTX, to test stablecoin products within its regulatory sandbox. The review will help establish the UK’s final rules.
How the UK Sits in the Global Race
The US passed the GENIUS Act in July 2025, ending years of federal ambiguity by creating a clear licensing pathway for payment stablecoin issuers under the Office of the Comptroller of the Currency. The EU’s MiCA regulation has been live since mid-2024. Singapore, Hong Kong, the UAE, and Japan all have active or near-final frameworks.
The Transatlantic Taskforce for Markets of the Future, co-chaired by HM Treasury and the US Treasury and involving the FCA, SEC, CFTC, and BoE, is actively working toward cross-border recommendations on stablecoin issuance, custody standards, and tokenized instruments. Coinbase, Circle, Ripple, Citi, Bank of America, and Barclays are all participating in those discussions. Its report is due in summer 2026.
What Happens Next?
The BoE’s public consultation closed on February 10, 2026. The bank is now reviewing responses before consulting on and finalizing its codes of practice, which will set out detailed compliance requirements for systemic issuers. A joint BoE-FCA approach document will follow, clarifying how the two regulators’ responsibilities work in practice. A senior BoE official told a recent parliamentary committee that the bank expects to open applications from stablecoin issuers by the end of 2026.
HM Treasury has also separately finalized the broader regulatory framework for fiat-backed stablecoins, bringing all qualifying issuers under FCA authorization. The total stablecoin market currently exceeds $307 billion in capitalization. Whether a credible sterling stablecoin can carve out space in that market depends almost entirely on what the final UK rules look like and how closely they align with the rest of the world.
