Key highlights
- The Bank of England has set a final timeline for introducing a regulatory framework for stablecoins by the end of 2026.
- The proposed framework stipulates that stablecoin issuers must back their coins primarily with high-quality, short-term government bonds.
- The Bank of England plans to exempt cryptocurrency exchanges and payment companies from its initial proposed holding limits.
While countries like the United States are adopting stablecoins to strengthen their USD dominance, the Bank of England is also now preparing to integrate stablecoins into the mainstream financial system.
Bloomberg reports that the Bank of England plans to introduce stablecoin regulations by the end of 2026, with public consultations scheduled to begin on November 10, 2025. The proposed framework takes its cue from US regulations and requires reserve assets to consist primarily of:
— Wu Blockchain (@WuBlockchain) October 17, 2025
According to the latest reports, the Bank of England plans to introduce full regulation for these digital currencies by the end of 2026. By introducing a clear regulatory framework, the UK seeks to manage the risks associated with stablecoins.
The cumulative market capitalization of stablecoins currently stands at approximately $307.31 billion. challenging.
The proposed UK framework is closely modeled on US guidance. The core of the plan requires companies issuing stablecoins to hold highly secure and liquid assets to back the value of the coins.
Specifically, these reserves should primarily be high-quality, short-term government bonds maturing within three months. This approach is designed to ensure that people can always exchange stablecoins for real currency. This ensures that the digital currency is fully pegged to the underlying asset.
The rules would also allow some of the reserves to earn interest, which could encourage more companies to issue sterling-denominated bonds and create more demand for UK government debt.
Bank of England public consultation begins November 10
Public consultation on the proposed rules is scheduled to begin on November 10. The Bank of England will collect feedback from the financial industry, technology companies and consumer groups. This process will help finalize the regulations.
The central bank’s strategy also addresses early industry concerns about proposed limits on how many stablecoins individuals and businesses can hold. These initial limits were intended to prevent large, rapid movements of funds from traditional bank accounts.
The Bank of England also stated that exemptions will be made for cryptocurrency exchanges and payment companies. Lieutenant Governor Sarah Breeden said initial restrictions would be lifted once the associated risks were properly managed.
This way, authorities can foster innovation in the digital asset sector without jeopardizing the stability of the wider financial system.
Currently, stablecoins linked to the British pound make up a very small portion of the market. These regulatory developments will also help countries create alternatives to digital payment systems as they confront the overwhelming dominance of the US dollar.
Approval of the GENIUS Act allows major banks to enter the stablecoin arena.
This comes after US President Donald Trump signed the GENIUS Act into law, approving the first legislation on stablecoins. Major financial institutions around the world are moving quickly to launch stablecoin projects.
They see these stablecoins as key to enabling faster and cheaper international payments and using them to tokenize real-world assets like stocks and bonds.
JPMorgan Chase, the world’s largest bank by market value, is a major player in this latest trend. Last June, the bank applied to trademark ‘JPMD’, a digital token that functions much like a stablecoin for institutional clients.
JPMorgan CEO Jamie Dimon was once a critic of cryptocurrencies. However, he confirmed on the earnings call that the bank would deepen its involvement in stablecoins to compete with its financial services rivals.
Last October, major global banks, including giants such as Citibank, Goldman Sachs, and Bank of America, announced that they were exploring the creation of a joint stablecoin.
Meanwhile, in Europe, officials are watching the trend closely. European Central Bank (ECB) President Christine Lagarde warned that the widespread use of digital currencies pegged to the US dollar could undermine the role of the euro and threaten Europe’s monetary sovereignty.
“Europe should not rely on the US dollar-denominated stablecoins that currently dominate the market,” said Pierre Gramegna, Executive Director of the European Stability Mechanism (ESM). “Stablecoins are an inevitable part of this equation!