The Bank of England (BoE) initiated a key consultation on November 10, 2025. The BoE, in coordination with the Financial Conduct Authority (FCA), seeks to establish UK stablecoin regulation. The goal is to integrate these assets into national payment systems without compromising financial stability.
The consultation focuses on “systemic stablecoins.” These are defined as those whose failure, according to the BoE, could create chain effects across the financial system. Issuers will be required to maintain high-quality liquid reserves. These reserves must be equivalent to 100% of the value of the tokens in circulation. Furthermore, the plan mandates strict operational resilience requirements and recovery plans.
This proposal aims to enable the use of stablecoins in everyday payments. However, it imposes strict controls to ensure trust. The 1:1 reserve requirement seeks to guarantee redeemability during times of market stress. The BoE and FCA are adopting a dual approach. The central bank will oversee systemic stability, while the FCA will manage investor protection, issuance, and custody.
Will the new British regulation stifle adoption or build trust?
The proposed framework has significant implications for the market. Increased reserve requirements will raise entry costs for issuers. This could favor large institutional players and consolidate the market. However, the most controversial proposal is the individual holding limit. A cap of £20,000 is suggested for sterling-denominated stablecoins.
The industry has questioned this limit. They warn it could slow retail adoption and limit high-volume use cases. There is also a risk that a conservative regime could push talent and capital to more permissive jurisdictions. Despite this, the formal integration of stablecoins could accelerate cross-border payments and benefit the digital economy. The sector has until late 2026, the target date for final rules, to debate this UK stablecoin regulation.
