The UK central bank is moving towards regulating stablecoins with the publication of a consultation paper proposing a regulatory framework for this class of assets.
The Bank of England (BoE) on Monday published a proposed regulatory regime for "systemic stablecoins" denominated in pounds sterling, or tokens that it says are widely used in payments and could therefore pose a risk to the UK's financial stability.
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Under the proposal, the central bank would require stablecoin issuers to back at least 40% of their liabilities with non-interest-bearing deposits at the BoE, while allowing up to 60% in short-term UK government debt.
The consultation paper requests comments on the proposed regime until February 10, 2026, and the BoE plans to finalize the regulations in the second half of the year.
As part of the proposal, the central bank suggested limiting individual holdings of stablecoins to £20,000 per token, while allowing exemptions from the proposed £10,000 for retail businesses.