The Bank of England has published its policy statement and draft Code of Practice for systemic stablecoin issuers, establishing the framework that will govern the largest sterling stablecoins and marking a defining step in the creation of the UK's stablecoin regime. Released on 22 June 2026, the rules reflect feedback from last year's consultation and are designed to let issuers innovate and scale while maintaining the resilience and confidence the Bank regards as essential to any form of money.
The framework targets stablecoins judged systemic — those large or widely used enough that their failure could threaten financial stability — and sets out two headline policy decisions that revise what the Bank originally proposed. On backing assets, the maximum share an issuer may hold in interest-bearing instruments, specifically short-term UK government debt, has been raised from 60% to 70%, with the remainder held in central bank deposits that allow issuers to meet redemptions promptly. The Bank framed the change as supporting more viable business models while preserving the capacity to handle outflows, addressing industry concern that an overly restrictive backing requirement would make stablecoin issuance commercially unworkable.
The second major decision concerns how the Bank manages the risk that a rapid migration of deposits into stablecoins could drain funding from the banking system and constrain credit. Rather than the temporary holding limits it consulted on last year, the Bank will apply a temporary issuance guardrail to each systemic stablecoin, initially set at £40 billion. It described this as delivering the same policy outcome more cheaply and simply, while allowing unrestricted use by households and businesses, and said the guardrail would be reviewed regularly and removed once risks to credit provision have been addressed. The shift from per-user holding caps to a per-issuer issuance ceiling is a notable easing in approach, removing a constraint that would have applied directly to consumers.
The regime is being built jointly with the Financial Conduct Authority, which the Bank said is working closely with it to deliver an end-to-end framework, including a managed transition as firms grow from non-systemic to systemic status, with further detail to follow alongside the FCA's final rules. Sarah Breeden, the Bank's Deputy Governor for Financial Stability, described the publication as a major milestone in delivering greater choice and innovation in UK payments, arguing that innovation depends on trust and that the framework sets the foundations of that trust through prompt redemption, strong protections and central bank support. She characterised the result as a world-leading regime.
The proposals carry significant implications for the payments and digital-money sector. A clear, stability-focused framework gives prospective issuers the regulatory certainty needed to commit capital and build sterling stablecoin products at scale, while the £40 billion guardrail and the 70% backing cap define the commercial parameters within which those businesses must operate. Stablecoins could enable faster, cheaper and more flexible payments, including cross-border transactions and programmable functionality, and a credible UK regime positions sterling-denominated digital money to develop within supervised limits rather than offshore or unregulated. The calibration of the backing and issuance rules will shape how attractive the UK is as a base for issuers relative to other jurisdictions building their own frameworks.
The consultation on the draft Code of Practice runs until 22 September 2026, with the Bank intending to finalise the rules by the end of the year and the regime allowing regulated stablecoins to operate in the UK from 2027. How issuers respond to the revised backing and guardrail parameters will indicate whether the calibration strikes the balance the Bank intends between enabling innovation and protecting financial stability and the supply of credit. Whether the UK's framework proves genuinely world-leading, as the Bank contends, will depend on whether issuers choose to build within it — and the next test is the quality of the response the consultation draws before September.
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