The Bank of England has published a policy statement and draft rulebook for systemic stablecoin issuers, aiming to establish a safe and trustworthy regulatory framework for stablecoins in the UK. The draft sets an initial issuance cap of £40 billion, a limit designed to balance innovation with financial stability risks.
Key provisions include a prohibition on paying interest to stablecoin holders, ensuring the tokens function purely as payment instruments. Reserve assets must consist of 70% short-term UK government gilts and 30% Bank of England deposits to guarantee liquidity. Issuers are also required to process redemption requests within 24 hours. These rules are intended to enable UK-issued stablecoins to evolve into reliable digital currencies while supporting safe innovation and mitigating systemic risks.
The Bank of England stated that the draft represents the first step in the regulatory framework, with further refinements to follow based on feedback. Market observers view the proposal as a potential template for major economies in the stablecoin regulation space.