The Bank of England is preparing to unveil its regulatory framework for stablecoins around 10 November 2025, with a clear message that the UK aims to implement its regime just as quickly as the United States, despite external perceptions of being behind. This initiative is a pivotal move in the UK’s ambition to become a global hub for digital assets. Rather than a broad approach, the initial regulatory focus will be on so-called systemic stablecoins—those potentially used widely for everyday payments. Other stablecoins will, for the time being, remain under a lighter-touch supervisory regime overseen by the Financial Conduct Authority (FCA).
The proposed framework will include temporary holding limits, with individuals potentially restricted to holdings of £20,000 and businesses to £10 million. While appearing restrictive, these caps underscore a critical concern for UK regulators. Deputy Governor Sarah Breeden of the Bank of England has explained that the UK’s mortgage market is heavily dependent on bank deposits, making it uniquely vulnerable should deposits rapidly migrate into stablecoins. The central bank’s objective is to prevent a scenario where large-scale outflows from commercial banks into digital assets could trigger a sudden contraction in credit for households and businesses, thereby threatening the real economy. These limits are intended to be temporary, remaining in place only until the Bank of England is confident that such financial stability risks have subsided.
This regulatory push is part of a wider, accelerating effort by UK authorities to build a comprehensive regulatory environment for digital assets. In April 2025, HM Treasury published a draft statutory instrument that would bring activities like operating crypto trading platforms, providing custody services, and issuing stablecoins into the UK’s regulated financial services perimeter. This represents a significant shift from simply retrofitting existing rules towards creating a bespoke framework tailored to the unique characteristics of cryptoassets. The FCA is concurrently developing a dedicated prudential sourcebook, known as CRYPTOPRU, and aims to finalise the joint regulatory framework with the Bank of England by the end of 2026.
The underlying goal is not to stifle cryptocurrency innovation but to prepare the financial system for a future where stablecoins are mainstream. The Bank of England’s plan involves regulating systemic stablecoins on par with traditional banks, which could include requiring issuers to hold reserves in high-quality liquid assets and granting them access to the central bank’s reserve facilities. This would integrate stablecoins into a reconfigured two-tier monetary system centred on the central bank, aiming to combine innovation with financial stability. Parallel to the regulatory efforts, the government is also fostering innovation through initiatives like the planned issuance of a ‘digital gilt’ (DIGIT) within the Digital Securities Sandbox and the appointment of a ‘digital markets champion’ to oversee the transition to blockchain-based financial infrastructure.
