The Bank of England has approved final rules for stablecoins: stability at any cost
The Bank of England has unveiled its long-awaited final regulation for systemically important stablecoins denominated in pounds sterling. This is a landmark step that sets the direction for digital asset development in the UK for years to come. After analyzing market consultations, the regulator has made certain concessions but maintained strict control over key risks.
The main change concerns the reserve structure. Initially, it was proposed that issuers would be required to hold 40% of collateral in non-interest-bearing deposits at the central bank. In the final version, this threshold has been lowered to 30%. The remaining 70% can now be invested in short-term UK government bonds with maturities of up to six months. This decision is a reasonable compromise between issuer profitability and absolute asset liquidity.
However, the regulator categorically rejected the possibility of using deposits in commercial banks as collateral. According to the Bank of England's assessment, this would create unacceptable risks for financial stability, especially during systemic crises. As an analyst, I consider this an absolutely correct decision: mixing stablecoins with bank balance sheets would mean repeating the mistakes of 2008.
Instead of individual limits on coin ownership for individuals and legal entities, a general issuance cap of £40 billion per stablecoin has been introduced. This is a temporary "safeguard" that the regulator plans to gradually increase or completely remove as the financial system adapts to the new asset class. Issuers are also required to guarantee coin redemption at par within 24 hours of a request.
Support and Political Background
To strengthen confidence in the sector, the Bank of England has announced the launch of an emergency liquidity facility in 2027. Issuers will be able to obtain loans from the central bank backed by government bonds. The full set of rules is expected to be finalized by the end of 2026, and a two-tier regulatory framework will be developed jointly with the Financial Conduct Authority.
The publication of the document coincides with a severe political crisis: Prime Minister Keir Starmer resigned after Labour's defeat in local elections amid rising inflation and an energy crisis. Despite political turbulence, the Bank of England demonstrates its commitment to modernizing the economy through digital assets. It was previously announced that the regulator will focus its future strategy on tokenization of real-world assets (RWA).
My conclusion: The Bank of England is charting a pragmatic path for stablecoins, balancing innovation and stability. Reducing the reserve share at the central bank to 30% is a signal to the market, but the £40 billion cap and the ban on commercial deposits indicate that the regulator is not ready to cede control over monetary issuance to private players. This is not a revolution but an evolution, and it will be slow.