The Bank of England and the Financial Conduct Authority published their rules for sterling stablecoins in the summer of 2026. This article explains what has been decided, what remains open for consultation, and what it could mean for how money moves.
What is a stablecoin, and why are regulators interested?
A stablecoin is a digital token designed to hold a steady value, usually by being backed by a pool of conventional assets in the same currency. A sterling stablecoin would aim to be worth £1 per token and be redeemable for pounds on request.
Until now, most of the market has been denominated in US dollars and has been used chiefly to buy and sell other cryptoassets. UK authorities are building a framework for something broader: tokens that might one day be used for everyday payments. That is why two regulators are involved, with different jobs.
How will responsibility be split between the Bank and the FCA?
According to the Bank of England and FCA’s joint approach paper, published on 30 June 2026, the FCA regulates all UK-issued qualifying stablecoins. If HM Treasury recognises an issuer as systemic, the Bank and the FCA regulate it jointly.
In that case the paper describes a division of labour. The FCA leads on areas such as consumer duty, conduct of business and financial crime. The Bank leads on areas such as governance, outsourcing and operational resilience, and takes responsibility for prudential regulation. Complaints handling and access to the Financial Ombudsman Service sit on the FCA side.
The Bank says “systemic” refers to stablecoins widely used in payments that could pose risks to financial stability. Its approach paper says HM Treasury can recognise an issuer as systemic after consulting the Bank, the FCA and the Payment Systems Regulator, with factors such as transaction volumes, substitutability and interconnectedness considered. An issuer likely to reach that scale can be recognised as systemic at launch.
What did the Bank of England decide on 22 June 2026?
On 22 June 2026 the Bank published a policy statement and a draft Code of Practice for sterling-denominated systemic stablecoin issuers, building on its November 2025 consultation. Three decisions stand out.
- Reserves: the maximum share of backing assets that can sit in interest-bearing assets, such as short-term UK government debt, rose from 60% to 70%. The rest must be held as deposits at the central bank.
- No holding limits: the temporary caps on how much of a stablecoin a household or business could hold, proposed in November 2025, will not be introduced.
- An issuance guardrail: instead, each systemic stablecoin faces a temporary limit on total issuance, initially £40 billion. The Bank says it will review this regularly and remove it once risks to credit provision are addressed.
Why do reserves matter? A worked example
The reserve rule is the heart of the safety case. Central bank deposits are the most readily available way to meet redemptions, while short-term government debt earns a return for the issuer. The mix is a trade-off between resilience and a viable business model, and the Bank’s move from 60% to 70% shifts it a little towards viability.
Illustrative arithmetic shows the scale. Take a hypothetical issuer with £1 billion of coins in circulation and a matching reserve pool:
| Reserve component | Share | Amount |
|---|---|---|
| Short-term government debt (maximum) | 70% | £700 million |
| Central bank deposits (remainder) | 30% | £300 million |
At the full £40 billion guardrail, the same split would mean up to £28 billion in short-term government debt and at least £12 billion in central bank deposits (70% and 30% of £40 billion). These are illustrations of the rule, not forecasts of any issuer’s balance sheet.
What is the FCA’s role in everyday stablecoins?
The FCA published its final rules for stablecoin issuance in policy statement PS26/10 on 30 June 2026, alongside other policy statements for its new cryptoasset regime. According to the FCA, the rules simplify the calculation of backing-asset requirements, confirm that statutory trust arrangements apply to backing assets, and remove unallocated backing fund accounts. Qualifying stablecoins are described as fully backed and redeemable at par, and the rules add clarity on how redemption requirements apply in the secondary market.
The FCA’s page also gives holders practical safeguards: access to historical disclosures, and prospective holders must be made aware of their withdrawal rights. It is careful, too, to say that cryptoassets remain high risk and that consumers could lose their entire investment. The sources opened for this article do not say that stablecoin balances carry deposit-style compensation protection, so readers should not assume it.
When does any of this actually start?
The timetable is staged, and it is long.
- 30 September 2026: the FCA’s application window opens for firms seeking to rely on its transitional provisions, closing on 28 February 2027.
- 22 September 2026: the Bank’s consultation on its draft Code of Practice closed.
- End of 2026: the Bank intends to finalise its Code of Practice.
- 25 October 2027: the FCA’s remit expands to cover stablecoin issuance from a UK establishment, with the wider set of regulated cryptoasset activities.
The Bank’s release says the regime allows regulated stablecoins to operate in the UK from 2027. The FCA will also consult on how the two regulators’ responsibilities will work in practice once the Bank’s Code is final.
Will stablecoins change how wealth is held and moved?
This section is analysis, not reporting. The official documents describe a payments and financial-stability regime, not an investment product. Nothing in them suggests stablecoins are a way to grow wealth: a stablecoin that works as designed is worth £1 and stays worth £1. The Bank’s scheme also does not state whether issuers may pay holders a return, so that question remains open in the material reviewed.
Where the technology could matter is in the plumbing. Faster settlement between businesses, cheaper cross-border transfers and programmable payments are the benefits often cited, and they would accrue first to firms and platforms rather than to individual savers. The same fintech competition has already reshaped investment platforms, as covered in our look at how fintech is taking over wealth management, and the same pressure may be felt by banks if payment balances migrate to tokens.
That last point explains the Bank’s caution. The guardrail exists because a rapid shift of deposits into stablecoins could reduce the funds banks have available to lend. For savers weighing where to hold cash, the established options are covered in why cash is making a comeback for high earners.
What should be watched next?
Several things are still unsettled. The Bank’s final Code of Practice, due by the end of 2026, will show whether the 70% reserve ceiling and the £40 billion guardrail survive consultation. HM Treasury’s decisions on which issuers are systemic will determine who falls under joint supervision. And the FCA’s follow-up consultation will clarify day-to-day responsibilities.
There is also a wider pattern of finance becoming easier to access through technology, which we explored in how private markets are becoming more accessible. Regulation is usually what decides whether such shifts reach ordinary households or stay confined to specialists.
A framework first, a market later
The UK has chosen to regulate stablecoins as payment infrastructure, with firm reserve rules, a cap on scale and shared supervision. For now, the practical effect for most households is nil: the regime does not begin in full until late 2027, and the Bank’s rules are still draft. The more useful question for readers is not whether to hold a stablecoin, but how a new form of digital money could alter the cost and speed of payments, and the competitive position of banks, over the next few years.
This article is general information, not personalised financial advice. Rules and rates change.
Sources: Bank of England; Financial Conduct Authority
