Bank of England Softens Stablecoin Rules with New Proposal
The Bank of England proposes eased stablecoin rules, allowing partial government debt backing while maintaining financial stability and investor protections.
Raja Awais Ali
11/10/20251 min read
Bank of England Softens Stablecoin Rules with New Proposal
On 10 November 2025, the Bank of England introduced new proposals for stablecoins—digital currencies pegged to traditional money. These proposals mark a shift from earlier strict rules, aiming to support industry growth while maintaining financial stability.
Previously, proposals required stablecoin issuers to hold all backing assets entirely in central bank deposits. Under the new framework, issuers can invest up to 60% of their reserves in short-term UK government debt, with the remaining 40% held at the Bank of England.
For systemically important stablecoins—those widely used for payments—an interim “step-up” framework allows issuers to hold up to 95% of their reserves in government debt during the initial phase.
The Bank has also proposed limits on holdings: individuals may hold up to £20,000 in stablecoins, while businesses may hold up to £10 million.
The Bank of England emphasized that cross-border coordination with international authorities will be part of its approach to ensure global regulatory alignment.
Sarah Breeden, Deputy Governor of the Bank, said: “We have carefully considered industry feedback and made adjustments to create a framework that balances financial stability with innovation in digital payments.”
Key Points:
Issuers can invest part of reserves in government debt, potentially improving returns.
Holding limits remain to minimize financial risks.
Interim framework for systemically important stablecoins allows up to 95% of reserves in government debt.
Proposals are a major step toward final rules expected by the end of 2026.
Analysis:
The eased regulations signal the UK’s intent to balance financial stability with innovation. While some restrictions remain, the new proposals open opportunities for growth, startups, and improved digital payment systems. Individuals and companies involved in the stablecoin market should review these rules carefully and plan accordingly.