Bank of England launches stablecoin consultation – what it could mean for you | Personal Finance | Finance
The Bank of England (BoE) has launched a consultation outlining proposed regulations for stablecoins. Stablecoins are a type of digital money designed to maintain a “stable value” and may be used for retail payments and wholesale settlement in the future.
According to the BoE, the consultation marks a “significant step in preparing for a future where new forms of digital money may be widely used for payments”. New forms of digital money, including stablecoins, aim to provide more payment options to the public. The consultation covers several key policy proposals, including backing assets and holding limits. The rules are expected to be finalised in 2026.
Andrew Bailey, governor of the Bank of England, said: “Our focus is on possible future use in real-world payments and settlements, not their current use to buy and sell cryptoassets. Use of regulated stablecoins could lead to faster, cheaper retail and wholesale payments, with greater functionality, both at home and across borders.
“We want to support such a role for stablecoins as part of a ‘multi-money’ system alongside commercial bank money (including tokenised bank deposits), all underpinned by the continued role of central bank money at the heart of the financial system.”
The consultation includes a £20,000 limit per stablecoin for individuals as well as a £10 million cap for businesses. Meanwhile, issuers allocate 60% to short-term UK gilts and 40% to non-interest BoE accounts.
Sarah Breeden, deputy governor for financial stability, described the proposals as a “pivotal step towards implementing the UK’s stablecoin regime next year”.
She added: “Our objective remains to support innovation and build trust in this emerging form of money. We’ve listened carefully to feedback and amended our proposals for achieving this, including on how stablecoin issuers interact with the Bank of England. These proposals are fit for a future where stablecoins play a meaningful role in payments, giving the industry the clarity it needs to plan with confidence.”
Stablecoins have existed since 2014 and, as of this month, around £232billion is held in them across the world. The BoE’s move to regulate the currency will reduce the risk of it losing its value.
A regulated pound sterling stablecoin could allow UK investors to hold digital assets in a tax-efficient vehicle. Brits may also be able to use the currency at supermarkets, cafés or online retailers.
However, the proposed £20,000 limit has already drawn criticism from industry experts.
Tim Meggs, co-founder and CEO of LO: TECH, a digital asset trading and market-making infrastructure firm focused on building transparent, institutional-grade liquidity solutions for crypto markets, said: “The scare headlines around 20,000 GBP stablecoin limits have already begun to trigger a bunch of scorn and memes on the internet.
“However, some of the institutional proposals within the consultation are sensible, although they could have come sooner, at a time when other regulatory regimes are really pushing innovation. £10 million limits for businesses, exclusions for some wholesalers, and stipulations around the composition of issuers’ treasuries all make sense as proposals.
“However, the issue isn’t with how sensible or not these consultation proposals are; it’s with the fact that the regulator is so far behind. In a world where the US put stablecoin legislation in place earlier this year, this stuff should be going into legislation now in the UK, not just consultation.”
Samantha Yap, founder and CEO of YAP Global, an international PR and communications consultancy that works with cryptocurrency, DeFi, and Web3 clients, added: “Many crypto businesses and high-net-worth individuals in the UK hold far greater sums, and such limits could stifle innovation rather than support it.
“While safeguards are important, overly restrictive measures risk pushing crypto entrepreneurs elsewhere. The UK can’t afford to drive talent and capital away at such a pivotal time for digital finance.”
Evgeny Yurtaev, co-founder and CEO of wallet infrastructure provider Zerion said: “Overall, this is a big win for the industry. Allowing stablecoin issuers to hold accounts at the Bank of England is a major step toward building real trust and legitimacy in the sector. Enabling most backing to sit in UK government debt will also create healthy yield opportunities for issuers, and, in time, for consumers.”
However, she added: “The proposed £20,000 cap feels somewhat arbitrary and difficult to enforce. If these assets are fully backed and safeguarded at the Bank, it’s unclear why usage should be restricted; the limit seems more about containing fears of deposit flight than about financial stability.”
The consultation is open until February 10, 2026. Following this, the Bank will consider feedback before consulting on and then finalising the Codes of Practice later in 2026. These will outline the detailed requirements for stablecoins.
