Bank of England opens consultation on ‘systemic’ GBP stablecoin rules with temporary holding limits

The Bank of England has initiated a consultation on its proposed regulatory framework for sterling-denominated stablecoins deemed "systemic" for use in UK retail and wholesale payments. The regime will see the Bank of England oversee prudential and financial stability risks, while the Financial Conduct Authority handles conduct and consumer protection. Non-sterling stablecoins or those primarily for crypto trading remain under FCA supervision. Key proposals include allowing systemic issuers to hold up to 60% of reserves in short-term UK government debt, with the rest in unremunerated Bank of England accounts, although an initial 95% allowance is considered for early viability. To mitigate risks from rapid deposit outflows into digital money, temporary holding limits of £20,000 for individuals and £10 million for businesses are proposed, which would be lifted later. The consultation aims to provide clarity for industry planning, with a joint approach paper expected next year.

(Source：The Block)