The Bank of England on June 22 published a policy statement and a draft Code of Practice for sterling-denominated systemic stablecoins. The proposal would revise the UK regime by replacing user holding limits with a temporary £40 billion aggregate issuance cap for each systemic stablecoin product and by changing reserve requirements to 70% short-term UK government debt securities and 30% deposits at the Bank.
The Bank said the systemic regime forms part of the UK’s wider stablecoin framework under the Financial Services and Markets Act 2023. The Financial Conduct Authority would cover issuance, custody and admission to trading for qualifying non-systemic stablecoins, while systemic payment systems would be supervised jointly by the Bank and the FCA once HM Treasury designates them as systemic.
Under the draft code, each systemic stablecoin product must be backed 1:1 by a separate pool consisting only of central bank money and short-term government debt. Issuers must maintain central bank money equal to at least 30% of the product total, notify the Bank if that share falls below 20% at reconciliation or below 25% for five consecutive business days, and submit a plan to restore compliance. The temporary issuance guardrail would prohibit further issuance once a product exceeds £40 billion, and issuers would have to notify the Bank and provide remediation steps if the limit is breached or expected to be breached. The Bank said the cap is not an indicator of the threshold for systemic recognition.
The policy states that full redemption requests must be completed as soon as practicable and no later than 24 hours after receipt, with timing starting once anti-money-laundering and know-your-customer checks are complete and the coins have been received. The draft code also bars interest or other benefits linked to holding or retaining the stablecoin, while allowing activity-based rewards tied to use as a payment instrument. The Bank said it plans to finalize the code by the end of 2026, alongside further supporting materials and a joint Bank-FCA transition document.