title: United Kingdom — Stablecoins & Digital Money | World Payments Monitor canonical: https://payments.gi/jurisdictions/united-kingdom/w2/ publisher: Asymmetric Intelligence ### W2 Stablecoins & Digital Money moved 1 judgment Confirmed confirmed 2026-06-20 On 22 June 2026 the BoE published its policy statement 'Sterling-denominated systemic stablecoins' and a draft Code of Practice, with consultation to 22 September 2026 and the Code to be finalised by end-2026 (regulated stablecoins from 2027). Per-holder holding caps were dropped for a temporary GBP40bn per-coin issuance guardrail; the interest-bearing backing share was raised 60%->70%. A BoE-FCA joint paper (~29 June) sets out the integrated two-part regime. Movement — CHANGED Stablecoin regime finalised (PS26/10, PS26/12, PS26/18)_FCA published final stablecoin issuance, prudential and perimeter rules this cycle._ Key judgment — Probable · impact CRITICAL The finalisation of the UK's non-systemic stablecoin regime (PS26/10, PS26/12) with no Overseas Persons Exclusion under PS26/18 establishes a materially tighter perimeter for overseas stablecoin issuers seeking UK market access ahead of the 25 Oct 2027 commencement._claims: wpm-2026-W42-002, wpm-2026-W42-004_ Horizon · 2027 (± a year) Regulated stablecoins able to operate in the UK_Adopted, not yet in force · Tier 1 source_ Horizon · 2026-H2 (± six months) BoE Codes of Practice for sterling systemic stablecoins_Consultation · Tier 1 source_ Horizon · 2026-09-22 (± a quarter) BoE systemic-stablecoin consultation closes_Consultation · Tier 1 source_ Horizon · 2026-09-30 (± a quarter) BoE consultation on systemic-stablecoin transition rules closes_Consultation · Tier 1 source_ Horizon · 2026-Q4 (± six months) BoE systemic-stablecoin Code of Practice finalised_Consultation · Tier 1 source_ Horizon · 2027 (± a year) Regulated stablecoins able to operate in the UK_Adopted, not yet in force · Tier 1 source_ Horizon · 2027-02-28 (± a quarter) FCA cryptoasset regime application window closes_Adopted, not yet in force_ Horizon · 2027-10-25 (± a quarter) SI 2026/102 full commencement (cryptoasset/stablecoin regime)_Adopted, not yet in force_ Horizon · 2026-Q4 (± a quarter) BoE Systemic Stablecoin Code of Practice finalisation expected_Consultation · Tier 1 source_ Horizon · 2027-10-25 (± a quarter) UK crypto/stablecoin regime commencement_Adopted · Tier 1 source_ Standing sub-brief · as of 20 June 2026 313 words · last cycle 2026-10-18 #### Stablecoins & Digital Money The UK is building a dual-authority stablecoin framework under FSMA 2023, which extended the BoE remit to digital settlement assets, with HM Treasury designating systemic stablecoins for joint BoE/FCA regulation. On 10 November 2025 the BoE published a consultation proposing a regulatory regime for sterling-denominated systemic stablecoins — digital money for retail payments and wholesale settlement — with the consultation running until 10 February 2026. Non-systemic issuers and custodians remain under the FCA (CP25/14, CP25/15). The consultation sets the prudential perimeter for sterling stablecoins used as payment instruments, and the backing-asset and holding-limit rules will determine the commercial viability of UK stablecoin issuance. The framework engages both bank and non-bank firms. The substantive proposals are contested. The BoE would let systemic issuers hold up to 60% of backing in short-term UK government debt with 40% in unremunerated BoE accounts, and proposes temporary holding limits of £20,000 per coin for individuals and £10m for businesses. The consultation closed 10 February 2026, with Codes of Practice to be finalised later in 2026. The individual holding caps have been criticised as stricter than US and EU equivalents, and the final caps will materially shape adoption economics for UK systemic stablecoins. On procedural status, the BoE is now considering feedback before finalising the Codes of Practice; caps remain under debate, and the BoE Governor has signalled a more positive stance. #### Outlook W2 is escalating. The key forward event is the BoE's Codes of Practice for sterling systemic stablecoins, expected in H2 2026, which will set final backing-asset rules and individual/business holding limits following the consultation that closed 10 February 2026. The level at which the holding caps are ultimately set is the principal commercial variable. This module also carries an illicit-finance dimension — stablecoin integrity as illicit-use — that sits beyond the WPM payment-instrument lens and is routed to the Financial Integrity Monitor. Periodic update · new data 2026-10-18 #### Stablecoins & Digital Money The FCA has finalised the UK's non-systemic stablecoin-issuance regime through two policy statements. PS26/10 confirms that qualifying-stablecoin backing assets must be held on statutory trust, with at least 5% held in on-demand deposits; unallocated backing-fund accounts have been removed from the finalised rule, and issuers are permitted up to a 5% pool excess. PS26/12 sets the stablecoin-issuance operational-risk K-factor (K-SII) at 1% of average coins in issuance, a reduction from the 2% level originally proposed in consultation. Both rules commence on 25 October 2027. Separately, PS26/18 names five new regulated cryptoasset activities — issuing qualifying stablecoins, safeguarding or arranging safeguarding of qualifying cryptoassets, operating a qualifying cryptoasset trading platform, dealing in or arranging deals in qualifying cryptoassets, and arranging qualifying cryptoasset staking — and confirms that Parliament created no Overseas Persons Exclusion for any of these five activities, a perimeter decision that applies to both bank and non-bank payment-institution/e-money-institution business models engaging in these activities. #### Outlook Firms currently operating stablecoin or cryptoasset products aimed at UK consumers without a UK-authorisation pathway should treat the absence of an Overseas Persons Exclusion as confirmation that authorisation, or a genuine UK-authorised intermediary, will be required once the regime commences on 25 October 2027. **2 earlier distinct update(s)** Periodic update · new data 2026-10-06 #### Stablecoins & Digital Money The Bank of England is advancing a dedicated regulatory track for sterling-denominated systemic stablecoins, distinct from the FCA's broader cryptoasset perimeter work. The Bank published a policy statement together with a consultation on a draft Systemic Stablecoin Issuer Code of Practice; that consultation closed on 22 September 2026. The Bank's FMI Annual Report 2025-26 states that, following feedback received, it intends to finalise the Code of Practice by the end of 2026, after which the Code can be applied to recognised systemic stablecoin issuers. As of the research date, no final text of the Code has been identified, so the applicable instrument remains the draft published for consultation rather than a settled rulebook; issuers and prospective issuers are therefore working from a policy direction that is confirmed in intent but not yet confirmed in final text. This sits alongside, but is legally and procedurally separate from, the FCA's cryptoasset perimeter guidance instrument (FCA 2026/55), which opens an authorisation application window on 30 September 2026 ahead of an in-force date of 25 October 2027. The two instruments proceed on different clocks and from different regulators: the Bank of England's Code addresses systemic stablecoin issuers specifically, while the FCA's perimeter instrument addresses the wider cryptoasset market-access question. A firm whose stablecoin activity is systemic in the Bank's sense, and which also falls within the FCA's expanded perimeter, will need to track both tracks independently rather than assume one subsumes the other. #### Outlook The end-2026 target for finalising the Systemic Stablecoin Issuer Code of Practice is the development to watch; until the final text is published, recognised systemic stablecoin issuers are operating against a draft Code informed by consultation feedback rather than a settled instrument. The FCA's perimeter regime, on its longer and separately-clocked timeline, becomes fully operative on 25 October 2027. Periodic update · new data 2026-07-07 #### Stablecoins & Digital Money The UK's systemic-stablecoin regulatory architecture advanced materially in June 2026. On 22 June 2026 the Bank of England published its policy statement 'Sterling-denominated systemic stablecoins' and a draft Code of Practice for systemic stablecoin issuers, with consultation open to 22 September 2026 and the Code intended to be finalised by end-2026, allowing regulated stablecoins to operate in the UK from 2027. A BoE-FCA joint approach paper published around 29 June 2026 sets out the integrated end-to-end two-part regime — the FCA solo-regulating non-systemic qualifying stablecoin issuers and the Bank of England prudentially regulating HM Treasury-recognised systemic issuers — with a managed transition. The BoE is also consulting, to 30 September 2026, on transition rules. The statutory recognition basis is the Banking Act 2009 as extended by FSMA 2023: HM Treasury recognises a payment system or issuer as systemic, triggering Bank of England prudential regulation. The regime aligns with the Government's 2024 National Payments Vision. The joint approach paper clarifies the FCA-to-BoE handoff for issuers crossing the systemic threshold, removing a key structural ambiguity for stablecoin business planning. The Bank of England made three significant calibration changes relative to its earlier consultation proposals, all in the direction of proportionate easing. First, the BoE abandoned proposed per-holder stablecoin holding caps — previously GBP 20,000 for individuals and GBP 10 million for businesses — and will instead apply a temporary per-coin issuance guardrail initially set at GBP 40 billion for each systemic stablecoin. Removing per-holder caps materially improves the commercial viability of systemic sterling stablecoins; the GBP 40 billion per-coin guardrail caps single-issuer scale instead. Second, the maximum share of stablecoin backing held in interest-bearing short-term UK government debt was raised from 60% to 70%, with the remaining 30% held as non-remunerated central bank deposits. Raising the interest-bearing reserve share improves issuer economics by allowing more yield on backing assets, directly addressing viability concerns. Third, the safeguarding architecture envisages two statutory trusts — one protecting coinholder holdings and one for orderly wind-down and return of holdings — plus a wind-down reserve, with HM Treasury to legislate Bank-enabling powers; redemption must be at par into central bank money. These targeted relaxations responded to the House of Lords Financial Services Regulation Committee report of 3 June 2026, which urged the Bank of England to drop holding caps and loosen backing rules. The EU shares the central-bank-money redemption anchor, leaving both jurisdictions facing the same viability-versus-monetary-hierarchy calibration challenge. The calibration figures for the holding-cap replacement and backing-share revision are currently anchored primarily to Tier 2–3 journalism and are held at High confidence pending direct rulebook citation. Taken together with the FCA's final cryptoasset rules published on 30 June 2026, the UK has within a single fortnight moved its two-part stablecoin regime decisively from proposal to near-finished form. The FCA handles non-systemic issuers; the Bank of England handles systemic issuers; the joint paper governs the transition between the two. The architecture is now sufficiently defined for operators to begin substantive planning. #### Outlook The BoE consultation on the draft Code of Practice closes 22 September 2026. The BoE consultation on transition rules closes 30 September 2026. The Code of Practice is targeted for finalisation by end-2026. Regulated stablecoins are expected to be able to operate in the UK from 2027. HM Treasury legislation to enable Bank powers for the statutory-trust safeguarding architecture remains a forward dependency. The principal open question is whether the GBP 40 billion per-coin issuance guardrail is intended as a permanent feature or will be revised as the regime matures — the BoE has described it as temporary, but the conditions for its removal or adjustment are not yet specified in the public record. **Sources and findings (5)** 1. T1 Bank of England — Proposed regulatory regime for systemic stablecoins — On 10 November 2025 the BoE published a consultation paper proposing a regulatory regime for sterling-denominated systemic stablecoins, designed as digital money for retail payments and wholesale settlement; the consultation ran until 10 February 2026. 2. T1 Bank of England consultation paper — FSMA 2023 expanded the BoE's remit to digital settlement assets including systemic stablecoins; systemic stablecoins (widely used in payments, posing financial-stability risk) will be regulated by the BoE and FCA once recognised by HM Treasury. 3. T1 Bank of England — launches consultation on regulating systemic stablecoins — BoE proposals would let systemic issuers hold up to 60% of backing in short-term UK government debt with the remaining 40% in unremunerated BoE accounts, and propose temporary holding limits of £20,000 per coin for individuals and £10m for businesses. 4. T3 Mayer Brown / Burges Salmon analysis — Non-systemic stablecoin issuers and cryptoasset custodians remain under FCA supervision; the FCA published CP25/14 (stablecoin issuance & cryptoasset custody) and CP25/15 (capital/liquidity), with the BoE systemic regime supplementing these. 5. T3 Arnold & Porter / Norton Rose Fulbright — The proposed individual holding caps have drawn criticism as stricter than the US or EU; the BoE Governor has signalled a more positive stance and the caps remain under debate. Final rules to follow Codes of Practice after the consultation.