Bank Of England Publishes Updated Stablecoin Regulation Proposals

Bank of England has published its stablecoin update.

The published policy statement and draft rules give stablecoin issuers an updated framework and roadmap to operate in the UK. The biggest revision is the stablecoin reserve allocation, raised from 60% to 70% in short-term government debt securities, and 30% in central bank deposits.

Following feedback from several consultations in 2025 and 2026, the Bank has revised its outlook on the key issue of stablecoin reserves.

Alongside this were parts of policy that remained unchanged, including redemption processes (real-time and end of day), capital and operational requirements (6 months' expenses minimum), and joint oversight by the FCA (Financial Conduct Authority) once approved by HM Treasury.

Equally, it is maintained that there is more risk to allowing multi-issuance foreign stablecoin issuers, rather focusing on single-issuance providers with clear reserve structures and regulatory body oversights abroad.

The leadership has heard the concerns of industry and elected to increase stablecoin reserve distributions leaning further towards government securities with 6 months maturation, meaning more interest-bearing reserves will be held by systemic stablecoin issuers.

This differs to the U.S. and EU practices, but places the UK regime as somewhere in the middle.

Also, the new rules propose a Central Bank Liquidity Facility for systemic stablecoin issuers to be launched in the future, bringing another backstop to deal with potential liquidity gaps and volatile market conditions. Issuers will now be able to lend their reserves out via overnight repurchase agreements in scenarios where more short-term liquidity is necessary.

Throughout, individual and business stablecoin holding limitations will be removed, as this is ultimately considered a broader safeguarding measure until the Bank is certain that there is no underlying market risk to participants and the economy. Under this, however, another restriction will impose a £40B stablecoin issuance cap on stablecoin issuers.

Other suggestions were considered, including imposing transaction-based limits, which were ruled out as ineffective under credit provision.

It is expected that updated disclosure requirements will be soon announced by the FCA, including reserve attestations and any operational risk or redemption difficulty warnings to be clearly posted on issuer websites.

For those willing to address the new provisions outlined and challenge or comment on any unchanged bits of proposed regulation, the publication leaves open a response deadline by 22nd September 2026.The roadmap seeks to finalize the Code of Practice in Q4 2026 to go live next year.

Additionally, the leadership team aims to release another publication for smaller stablecoin issuers in collaboration with the FCA.

Overall, this is an important update as promised on stablecoin regulation in the UK by Bank of England governor Andrew Bailey at the start of the summer.