Bank of England policy statement and draft rules on regulating systemic stablecoins

Sterling-denominated systemic stablecoin
Policy statement and consultation on draft Code of Practice Skip to main content Opens

Published on 22 June 2026
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Contents
1: Overview
1.1: Introduction
1.2: Summary of feedback to the 2025 consultation, and the Bank’s policy response 2: Bank feedback to consultation responses received 2.1: Policy revision 2.2: Policy clarification 2.3: Policy unchanged 3: Policy Implementation 3.1: New areas to highlight 3.2: Consultation questions for new policy proposals and the draft code of practice 3.3: Upcoming publications and timeline to finalise the regime 4: Responding to the consultation questions in this publication 5: Public Sector Equality Duty 6: Appendices

1: Overview
1.1: Introduction
The Financial Services and Markets Act (FSMA) 2023 introduced changes to the Banking Act 2009 to expand the remit of the Bank of England (the ‘Bank’) to cover digital settlement assets, including systemic stablecoins. Within the United Kingdom’s (UK) stablecoin regime, the FCA will regulate the issuance, custody and admission to trading of UK‑issued qualifying stablecoins. In future, the FCA will also regulate their use in payments, including for non‑systemic stablecoins. Systemic stablecoins, those that are widely used in payments and may therefore pose risks to UK financial stability, will be regulated jointly by the Bank and the FCA, once recognised by HM Treasury (HMT). Reflecting the importance of sterling in UK payments and as a global currency, the Bank’s regulatory approach focuses primarily on sterling‑denominated systemic stablecoin issuers. It also makes provision for issuers of non‑sterling‑denominated systemic stablecoins should their use become widespread in the UK. This publication sets out the Bank’s policy positions for the regulation of systemic stablecoin issuers. It explains how we have reflected and taken account of consultation feedback to the proposals set out in the Bank’s November 2025 consultation paper. It also includes a consultation on a draft Code of Practice (rules) for sterling-denominated systemic stablecoin issuers,[1] which implement the policy positions. The draft Code of Practice can be found in
Appendix 4 of this publication. Following this publication, we intend to finalise the Code of
Practice by end‑2026, after which it will apply to recognised systemic stablecoin issuers. We are also releasing a joint publication with the FCA, which we intend to publish shortly. This publication will set out how the two parts of the UK’s stablecoin regime will operate in an integrated, end‑to‑end manner, including the approach to firms transitioning between them. We will also consult on and publish some final supporting materials for systemic stablecoin issuers in 2027, as outlined further in Section 3.3. 1.1.1: Establishing the systemic part of the UK stablecoin regime This publication marks a significant milestone in delivering a comprehensive UK regime for stablecoins. It sets a clear pathway for UK-issued, sterling-denominated stablecoins to operate at scale across a range of retail and wholesale use cases. footnote Opens

Alongside other UK authorities (HMT, the FCA and the Payment Systems Regulator (PSR)[2]) the Bank is developing a framework to deliver a thriving, dynamic and competitive payments landscape. This is characterised by competition and greater choice across different forms of robust money that operate alongside one another and can be exchanged with ease. In combination with the FCA’s requirements for qualifying stablecoin issuers, the Bank’s regulatory approach lays the foundations for sterling-denominated stablecoins to operate at scale as a trusted and interoperable component of this emerging multi-money system. The Bank’s regulatory approach to systemic stablecoins reflects a deliberate policy design:
enabling innovation and market entry, while embedding robust safeguards from the outset to support trust as adoption grows. It provides clarity and certainty for firms, and embeds proportionality in the approach, enabling viable and sustainable stablecoin business models to develop safely. The Bank’s regulatory approach speaks directly to many of the recommendations made in the Financial Services Regulation Committee (FSRC) report published on 3 June 2026.[3] This includes ensuring that the Bank adheres to pre-committed timelines, that our approach provides sufficient clarity for industry, and puts in place a proportionate and forward-looking regime that makes it attractive to innovate in the UK.[4] As stablecoins scale, including through transition from the solo-regulated FCA part of the UK stablecoin regime into joint Bank-FCA systemic part of the regime, we expect them to be able to deliver significant benefits. This includes enhancing choice and flexibility for consumers and businesses. At the same time, our approach will ensure that risks are effectively identified and managed as stablecoins scale, to safeguard monetary and financial stability and preserve trust in money as new forms emerge. 1.1.2: The role of sterling-denominated stablecoins in the next generation payments landscape Aligned with the UK authorities’ broader innovation agenda across retail and wholesale payments, the UK regulatory regime for stablecoins is a key component of the National Payments Vision (NPV), and sits alongside the work on interoperability for the next generation retail payment infrastructure. The Bank is working alongside industry through the Retail Infrastructure Payments Board (RPIB), and engaging and consulting with the broader payments ecosystem to inform the design of this future payments infrastructure. footnote footnote Opens

As set out by the Bank in the Modernising markets and money speech, people should be able to pay with a range of different forms of money. Alongside traditional bank deposits, this includes tokenised bank deposits, regulated stablecoins and, potentially, a retail central bank digital currency (CBDC). More competition, from a wider range of technologies and business models, should lower costs and improve functionality for users. Consistent with the use cases set out in the 2025 consultation, the Bank expects stablecoins could support a range of applications in retail payments. This includes everyday transactions by households and businesses such as person-to-person transfers, merchant payments and online purchases, as well as cross-border payments. In doing so, stablecoins bring scope for benefits such as faster and cheaper settlement and the ability to support greater functionalities with more programmable forms of payment. We think that central bank money has, and will continue to have, a critical role in final settlement in wholesale financial markets. However, as part of the UK’s wider vision for digital assets and the tokenisation of wholesale financial markets, there may be a complementary role for stablecoins alongside commercial bank money for settlement in wholesale markets. The Bank is continuing to explore this with industry through the Digital Securities Sandbox (DSS). We intend to publish updated DSS guidance, including on the use of stablecoins in the DSS, shortly. Taken together, these developments reflect continuing work by the authorities and industry to support a joined‑up, forward‑looking framework for innovation in financial services. They reinforce the UK’s position as a leading environment for the safe adoption of new forms of money. 1.1.3: Key developments since the 2025 consultation, and core elements of the Bank’s regulatory approach Following the November 2025 consultation paper, the Bank engaged extensively with industry and external stakeholders, including through written responses and a programme of stakeholder meetings and discussions. We have carefully considered the feedback given, particularly the substantive feedback on the two key areas of backing asset composition and holding limits. We have also considered the recommendations set out in the FSRC report on the regulation of stablecoins. This publication sets out our policy decisions, incorporating targeted revisions reflecting both our policy objectives and feedback received from consultation. A core strength of the UK regulatory approach to systemic stablecoins is its focus on highquality backing assets. This underpins issuers’ ability to maintain one-to-one backing for redemptions on demand, supporting trust in stablecoins as a credible form of money. In Opens

response to industry feedback, we have revised our proposals on backing asset composition to support the viability of issuers’ business models. This brings the regime closer in line with historical liquidity risks and requirements observed in the banking sector, thereby fostering future stablecoin issuance in the UK. We have also responded substantively to feedback on holding limits. This publication sets out a revised, more proportionate approach that focuses on a ‘temporary issuance guardrail’ for aggregate issuance of each systemic stablecoin, as the financial system adapts to this new form of money. These changes support innovation and the entry of new firms, while safeguarding the continued supply of credit to households and businesses during the transition. This publication also provides further detail to clarify our position across the remaining policy areas. This includes capital, safeguarding and remuneration for coinholders, and our policy approach to ensure redemptions are delivered promptly and reliably. It sets out our approach to failure arrangements to protect coinholders in the event that a stablecoin can no longer continue to function. We also confirm our approach to the Central Bank Liquidity Facility that we intend to introduce for systemic stablecoin issuers. This component of the UK regulatory approach to systemic stablecoins is designed to reinforce confidence in sterling-denominated stablecoins, through its role as a backstop facility from which issuers can source liquidity. Together with issuers’ ability to place funds on deposit with the central bank, these measures represent significant steps in supporting stablecoin innovation in the UK. Opens

Figure 1: Key highlights of the June 2026 publication for the Bank's systemic
stablecoin regulatory approach
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1.2: Summary of feedback to the 2025 consultation, and the Bank’s policy response Opens

Table A: Summary of 2025 consultation proposals, feedback, and the Bank’s updated
policy response
Proposed approach in 2025 CP Stakeholder feedback to 2025 CP Bank’s response/updated policy approach Backing assets Opens

Holding limits/temporary issuance ‘guardrail’

A 60/40 backing asset
composition: 60% short-term
UK government debt and 40% unremunerated Bank of England (BoE) deposits.
Repo to generate liquidity
from sterling-denominated
UK government debt securities is permitted.
Reverse repo is not permitted.
The 60/40 split is too
conservative; reduces viability and competitiveness, with calls for higher share of interestearning assets.
Call for broader eligible assets
(commercial bank deposits, money market funds); and greater flexibility/alignment with US/EU.
Concern some firms may attempt
to avoid systemic recognition to avoid backing asset requirements.
Calls for central bank deposits to
be remunerated by the Bank.
Revision to a 70/30 backing asset
composition: 70% short-term UK government debt and 30% unremunerated BoE deposits, consistent with historical liquidity risk events. This will apply in steady state (ie under the step-up approach systemic at launch firms will be able to hold up to 95% of their backing assets in UK government debt securities as they scale). This supports a viable business model for issuers while mitigating financial stability risks
We will permit, within backing assets,
government debt securities with a residual maturity of up to 6 months
Both overnight repo and reverse repo
with sterling-denominated UK government debt securities of 6 month or less maturity will be permitted.
Deposits at the central bank will
unremunerated. This is consistent with stablecoins used as payment instruments, not a store of value, and therefore not involved in monetary policy transmission. The step-up approach is designed to provide sufficient flexibility to support business model viability from the outset.
Commercial bank deposits will not be
permitted due to financial and operational risks, and the contagion risks this would create between stablecoins and the wider financial sector, including wider systemically important institutions. Similarly, a broader set of eligible assets will not be allowed, given the additional financial risks they would introduce to systemic stablecoins. Opens

Capital and reserve requirements

Transitional policy measures
needed to mitigate risks to credit provision.
Individual (£20k) and
business (£10mn) per coin holding limits, with exceptions possible for businesses.
Feedback sought on
alternatives during consultation process.
Significant operational
concerns, which could push issuance to non-sterlingdenominated stablecoins.
Investment not justified for a
temporary tool.
Business limit seen as too
restrictive, requests for clarity on how holding limit exemptions would work in practice.
On alternatives tools, some
preferred issuance caps or macroprudential tools, including strengthened bank capital and liquidity requirements, risk-based stress testing, counter-cyclical buffers and ‘emergency brakes’ to prevent bank deposits funding new stablecoin issuance during crises. Preference for using tools only when risks have crystallised.
Temporary guardrail on the level of
issuance per systemic stablecoin – initially set at £40bn.
Temporary guardrails on the level of
issuance have been sized to achieve the same level of credit provision limits, and are significantly less complex to implement.
The guardrail will be regularly reviewed
and removed once we are satisfied that the risk to credit provision has been effectively mitigated.
We considered other tools, including
stablecoin transaction limits and transaction limits on banks. We also considered implementation of holding limits only when risks crystalise. We ruled out these options. Transaction limits would not prevent repeated transactions and sizeable outflows from commercial bank deposits into stablecoins so may not be effective to mitigate risk to credit provision. Ex-post implementation of limits would be complex for issuers to implement in practice. Opens
Capital and liquid assets (on
balance sheet) for general business risks (GBR) at the higher of:
6 months’ operating
expenses;
Cost of recovery from
largest plausible loss and cost of orderly wind-down plan.
Overall agreed on
proportionate and risk-based approach (compared to fixed ratios).
Consider overall burden of
capital and other parts of the regime on competitiveness.
Sought guidance on calculation
and steps to avoid duplicated resources.
Sought simpler approach for
smaller (systemic at launch) issuers and additional requirements for globally significant issuers.
Requested clarity for approach to
issuers that are part of a banking group.
Updated the approach to be in line with
new guidance(a) issued by the CPMIIOSCO for financial market infrastructure.
Added guidance on the approach,
calculation and avoiding duplicated resources.
Proportionate application of requirements
for systemic at launch issuers by-case basis.
The Bank plans, in future, to explore jointly
with the Prudential Regulation Authority
(PRA) the approach to capital requirements for issuers that are part of a banking group.
Updated the GBR requirement to be the
higher of:
6 months’ operating expenses; or
Cost of recovery and orderly wind-down
plans (excluding amounts held in wind down reserve).
Reserve of liquid assets held
on trust (off-balance sheet) for:
Financial risks of backing
assets;
Wind-down and insolvency
costs.
Overall agreement that
reserves held on trust is the best approach for safety, but consider outcome-focused approach due to the cost and speed of realising trust assets.
Sought clear guidelines and
standard trust rules.
Avoid duplication of wind-down
resources with GBR capital.
Maintain our policy position.
Code of Practice (CoP) provides details of
how the wind-down reserve is calculated and avoids duplicated resources.
Introduce an add-on for the financial risk of
reverse repo transaction assets in the backing asset pool.
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Safeguarding and trust arrangements

Regulatory capital must be
permanently available for risk absorption (excluding intangible assets and other non-risk absorbing elements) largely in line with terminology of Common Equity Tier 1 (CET1) capital.
Agreed with the proposal for
capital quality to be CET1-like.
Requested reasonable time for
transition for FCA soloregulated issuers.
Maintain our policy position.
CoP includes calculation details and
requirement to notify the Bank before effecting changes to capital.
Transition timelines will be covered in joint
regulation consultation.
Quality of assets (funded by
capital for GBR as well as reserves) must be readily available when a risk crystalises with little to no delay or loss of value.
Provide list of permitted
assets.
Consider allowing money market
funds (MMF).
Consider appropriate haircuts for
assets with longer maturities than recovery/wind-down plans.
Assets held against interest rate
risk of short-term UK government debt should not be met with interest rate sensitive assets.
Agreed with industry feedback.
CoP provides a list of eligible assets for
each component.
Issuers are permitted to hold units and
shares of qualifying MMFs to meet GBR liquid asset requirement.
Issuers are permitted to hold a variety of
assets for GBR and reserve requirements subject to appropriate reduction in value when liquidated/withdrawn early.
Liquid assets held against interest rate risk
must be central bank money.
Backing assets should be
segregated and held in a statutory trust for the benefit of coinholders.
Majority of respondents
supported a statutory trust arrangement.
A minority preferred a less
prescriptive approach.
No clear preference on the
structure of the trust.
We will proceed with the statutory trust
mechanism. We do not consider that alternative approaches provide adequate protection.
There will be two trusts, one to protect
coinholders’ holdings and the other to ensure an orderly wind down and return those holdings.
HMT has agreed to introduce legislation to
give the Bank enabling powers for statutory trusts.
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Issuance, legal claim and redemption

Robust safeguarding rules,
including reconciliation and third party arrangements.
Responses on the safeguarding
rules focused on the identity of third parties holding safeguarded money and assets.
Respondents were also in favour
of allowing the retention of excesses in asset pools.
Alignment with the FCA regime
seen as important.
Allow an excess of 5% in the backing
asset pool, and no limits to excesses in other reserves.
Third parties must be separate legal
entities but may be in the same group as the issuer; due diligence and diversification requirements will apply.
The joint publication with the FCA, which
we intend to publish shortly, will address alignment and joint regulation issues.
Coinholders should have a
robust legal claim for the value of their stablecoins directly against the issuer and should be able to withdraw their funds on demand at face value without undue constraint or cost.
Majority of respondents
supported a strong, timely redemption process and that robust legal claims are foundational to a credible systemic stablecoin regime.
Maintain our policy position.
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Redemption requests should
be processed by the end of the day on which a valid redemption request is made, and in real time wherever possible.
Some respondents noted that
same day redemption could undermine AML/KYC controls as issuers would face pressure to rush checks.
Respondents also noted that
same day redemption requirement would be operationally challenging and risked overlooking traditional payment system cut-off times as well as the 24/7 nature of stablecoin markets.
Acknowledging payment system interaction
and operational challenges, we propose to maintain the requirement for redemption requests to be processed in real time or by end of day. This is in line with international standards, specifically the Application of the Principles for Financial Market Infrastructures to stablecoin arrangementsOpens .
Define ‘end of the day’ as issuers
having 24 hours from receipt of a full redemption request to complete a redemption on a rolling basis.
Start the clock once issuers have
received the request, completed AML/
KYC checks and received the stablecoins in their wallet from the person/business making the redemption request.
Stop the clock once the issuer instructs
a valid payment order for the transfer of funds to the holder’s account.
Issuers need to ensure liquidity is
prepositioned for payment orders meet redemption requests. That may be supported by the availability of funds held in the central bank deposit account. Opens

Remuneration and rewards for coinholders

Systemic issuers remain
responsible if redemptions are outsourced. They need to demonstrate that risks are sufficiently mitigated and all coinholders can redeem in normal and stress times.
Responses focused on
exploration of day‑to‑day convertibility and supervisory guidance, rather than fixed rules, to accommodate diverse business models.
Maintain our policy that issuers remain
responsible for third parties’ ability to comply with the Bank’s redemption requirements by placing the obligation for redemption on issuers in the rule.
The Bank will not restrict redemption
models. Issuers will be required to comply with the requirements set out in the Recognised Payment System Code of Practice, to be updated in 2027, including those relating to operational resilience, third-party risk management, and recovery planning.
Redemptions free of charge
where possible. Otherwise fees should be fair, transparent, and proportionate to the costs incurred.
Some responses called for
exploration of different fee structures, and alignment with FCA proposal.
Maintain our policy that redemptions
should be free of charge where possible. Otherwise fees should be fair, transparent and proportionate to costs incurred.
For systemic issuers where coins are being
widely used as money, fees should not negatively impact the face value of the coin at the point of redemption. Redemption fees, if any, cannot be deducted from redemption payments without the coinholder's express agreement. Opens

Payment system access

We proposed to maintain our
policy that systemic stablecoin issuers should not pay interest to coinholders.
Overall, respondents expressed
mixed views. Some respondents supported the proposal, viewing it as an important safeguard to reinforce the role of systemic stablecoins as payment instruments and to mitigate risks to financial stability.
Other respondents noted that a
broad prohibition on remuneration could affect business model viability.
Respondents also highlighted the
importance of greater clarity in distinguishing interest from other forms of incentives, such as rewards or loyalty arrangements.
Maintain our policy position that
systemic stablecoins should not pay interest to coinholders. This is consistent with other international regimes.
We will clarify that this policy relates to
issuers paying interest or income to the holding or retention of a stablecoin, including any payment calculated by reference to the period for which a systemic stablecoin is held.
We will permit coinholders to receive
activity-based rewards and other benefits or incentives that are consistent with the use of a stablecoin as a means of payment. Opens

Step-up approach for ‘systemic at launch’ issuers

We proposed to set the
expectation that systemic stablecoin issuers should access payments systems that support interoperability across different forms of money directly rather than through a sponsoring participant.
We received mixed views from
respondents for this proposal.
Some responses focused on providing clarity on the eligibility framework and criteria along with guidance on the access pathway.
Some responses focused on
liquidity constraints noting that indirect or tiered access via sponsoring participants or a clearing framework is more adequate to ensure liquidity for redemptions.
Some responses noted that
direct access should be an option rather than a requirement.
Maintain our expectation that systemic
issuers should access payment systems directly rather than through a sponsoring participant.
Direct access to payment systems
supports on‑demand redemption by enabling systemic stablecoin issuers to settle directly in central bank money. This supports the timeliness and certainty of payments while reducing reliance on intermediaries and mitigating operational and liquidity risks.
Direct access, facilitated by access to a
central bank deposit account, is crucial for timely and resilient redemption, and to support stablecoins’ interoperability with next-generation retail payment infrastructure and with other forms of money.
The Bank recognises that obtaining direct
access may take time for systemic issuers, as many payment systems will require access assessments. The Bank will monitor progress and operational feasibility for direct access. Opens

Approach to systemic non-sterling stablecoins

Stablecoin issuers recognised
by HMT as systemic at launch could be allowed to hold up to 95% of their backing assets in sterling-denominated UK government debt securities as they scale.
The percentage would be
reduced to 60% once the stablecoin reaches a scale where this is appropriate to mitigate the risks posed by the stablecoin’s systemic importance without impeding the firm’s viability.
We would expect stablecoin
issuers transitioning from the FCA non-systemic part of the UK regime to follow a similar path over an appropriate time horizon to ensure that transition is orderly.
Broad support for a phased,
step‑up approach, with calls for a clearer criteria and timing for transitions.
Some respondents called for
FCA–Bank coordination to avoid regulatory ‘cliff edges’, and a smooth process for shifting into the systemic part of the UK regime.
Many respondents called for
expanding permissible backing assets beyond UK government debt securities for firms under the step-up approach.
Adjustment of expected ‘end-state’ to
reflect the updated proposal on backing assets calibration of 70% short-term UK government debt securities and 30% BoE deposits. No further proposed changes to this position.
Approach for systemic at launch firms
and transitional arrangements for firms moving from FCA solo regulation will be set out in a separate Bank-FCA publication, which we intend to publish shortly.
An expanded set of permissible backing
assets will not be permitted under the stepup approach, given the additional financial risks they would introduce.
No simplified capital
requirement for systemic at launch issuers.
Respondents suggested we
consider simplified capital requirements for systemic at launch issuers.
Proportionate application of capital
requirements for systemic at launch issuers on case-by-case basis.
Approach based on
engagement with the home authority and potential deference.
Broad support for a deferencebased approach. Respondents
also called for greater clarity on how the Bank would determine whether a home authority’s framework delivers broadly similar outcomes.
Maintain our policy position and provide
further clarity on the elements we would consider when deciding whether to defer to a home authority. Source: Bank of England. (a) In November 2025, The Bank for International Settlements' Committee on Payments and Market Infrastructures (CPMI) Opens

on financial market infrastructures' (FMIs) management of general business risks and general business losses , we updated our proposals to be in line with the supplementary guidance provided in this report. Opens

2: Bank feedback to consultation responses received 2.1: Policy revision 2.1.1: Backing assets Proposed approach in the 2025 consultation paper A backing asset composition of 60% short-term UK government debt securities and 40% unremunerated BoE (central bank) deposits. Temporary deviations from the 60/ 40 backing asset composition split may be permitted to meet large unanticipated redemption requests. Systemic stablecoin issuers are permitted to lend short-term UK government debt securities via repurchase agreements to generate liquidity. Borrowing securities via repurchase agreements is not permitted. Consultation feedback The majority of respondents suggested the proposal on 40% central bank deposits in backing asset composition was overly conservative, affecting business model viability and international competitiveness. There were calls for a higher share of interestbearing assets. The FSRC called on the Bank to take into account the potential impact of requiring a proportion of unremunerated backing assets on the development of the sterling-denominated stablecoin market and for the Bank to reconsider whether it would be appropriate to remunerate at base rate the backing assets which are held as deposits at the Bank. There were also calls for broader eligible assets, including commercial bank deposits and money market funds. The Bank’s response and updated policy approach We acknowledge the issues raised and have reviewed the analysis supporting the calibration. We have adjusted our position to settle on bringing the central bank deposit requirement down to 30%, aligning the regime with historical liquidity stress events. Opens

For the remaining 70% we will allow issuers to hold short-term UK government debt securities with residual maturity of up to 6 months. We consider residual maturity of this length minimises price volatility, preserving the core objective of ensuring backing assets remain of stable value and low risk. On the back of their recent Treasury Bill (Tbill) market consultation, HM Treasury (HMT) and the Debt Management Office (DMO) are exploring how potential demand from stablecoins could inform T-bill issuance, as well as measures to support greater liquidity in secondary markets. We also explored broadening the set of eligible assets. We ruled out commercial bank deposits due to financial and operational risks, and the contagion risks this would create between stablecoins and the wider financial sector, including wider systemically important institutions. Similarly, a broader set of eligible assets will not be allowed, given the additional financial risks they would introduce to systemic stablecoins. We maintain that issuers may lend sterling-denominated UK government debt securities through repurchase (repo) agreements. As an adjustment from our previous policy position, we will also allow overnight reverse repo with collateral limited to sterling-denominated UK government debt securities of 6 month or less maturity, and subject to safeguards to ensure 1:1 backing of stablecoins in issuance is maintained at all times. The rules reflecting these policy positions can be found in Part 2: Backing assets (Annex B of Code of Practice). Our 2025 consultation set out a significant shift in the backing asset framework for systemic stablecoins relative to previous proposals. We proposed that at least 40% of backing assets be held as deposits at the Bank of England (central bank deposits), with up to 60% in shortterm sterling-denominated UK government debt securities. Consistent with emerging international regimes, this approach seeks to balance stablecoins’ role as a robust form of money while supporting the overall viability of issuer business models and the attractiveness of the UK as a place to issue stablecoins. The central bank deposit share was intended to ensure issuers could meet immediate redemption needs prior to needing to access same-day liquidity (if experiencing large unanticipated redemption requests, for example) and therefore ensure confidence in the stablecoin and avoiding broader financial stability risks from asset fire sales. The remaining allocation of backing assets will be to interest-earning short-term UK government debt securities enabling issuers to generate a return while maintaining exposure to safe, low-risk backing assets. Opens

This proposal was welcomed by industry participants as a positive shift from our previous requirement for 100% unremunerated central bank deposit backing, and a meaningful step towards supporting viable and competitive business models while maintaining strong safeguards for issuers to meet their immediate liquidity needs. Respondents did however provide constructive challenge, with many arguing that the proposed 40% calibration remained conservative relative to international benchmarks. Some also argued that a one day 40% run was too extreme for issuers to self-insure against and was more severe than banks’ liquidity requirements. There were calls from respondents for the Bank’s requirements to allow a greater share of interest-bearing assets and a broader set of eligible assets, including commercial bank deposits and money market funds. The FSRC called on the Bank to take into account the potential impact of requiring a proportion of unremunerated backing assets on the development of the GBP stablecoin market and for the Bank to reconsider whether it would be appropriate to remunerate at base rate the backing assets which are held as central bank deposits. We have carefully considered this feedback and used it to refine our approach. In particular, we have reassessed our estimates of potential short-term redemption pressures and calibrated the regime accordingly. We will now allow a lower central bank deposit requirement of 30%, bringing the framework more closely into line with historical liquidity stress events while continuing to provide a credible and resilient liquidity anchor. We judge that reducing the requirement further would materially weaken liquidity protection and increase risks of disorderly asset sales in stress. The central bank deposit share will remain unremunerated as stablecoins are intended to be a payments instrument, rather than a store of value and therefore will not play a role in monetary policy transmission. Under the revised framework, issuers will be able to earn a return on the remaining 70% of backing assets held in UK short-term government debt securities. We will limit the maturity of these assets to six months. This should minimise price volatility, preserving the core objective of ensuring backing assets remain of stable value and low risk. Allowing securities with a maturity greater than six months would increase the maturity mismatch between stablecoin backing assets and coins in issuance which are redeemable on demand and could create challenges in failure scenarios. HMT and the DMO have consulted on how potential stablecoin demand could inform the issuance of the UK’s short-term sovereign debt and any associated interactions with the functioning of this market. This reflects both factors that inform T-bill primary issuance, consistent with the government’s debt and cash management objectives, as well as the resilience and liquidity of secondary markets. Taken together, these considerations would Issuers
will be able to hold 70% of their backing assets in short term UK government debt securities. Opens Opens

help to support stablecoin issuers’ access to an effective and well-functioning market for these government debt securities. HMT and DMO noted in their T-Bill consultation response that they ‘will continue to be responsive to evolving market demand – including as a result of the potential development of a GBP-denominated stablecoin regime.’[5] At the same time, we have maintained a clear and consistent stance on the scope of eligible assets. We will not extend the allowable backing assets to include commercial bank deposits or other broader asset classes. The Financial Policy Committee (FPC) judged that backing systemic stablecoins with commercial bank deposits could introduce material financial stability risks, including through ‘tiering’ dynamics, as previously outlined in the March 2022 Financial Stability in Focus. In times of stress, redemption pressures could trigger rapid withdrawals from safeguarding banks, amplifying liquidity strains and giving rise to a ‘tiering’ risk from such relationship. Tiering, as a symbiotic structure, could increase financial stability risks by deepening interconnectedness between systemically important firms. While tiering is already common in e-money as well as in indirect access to payment systems, the FPC has judged that there would be significant financial stability risks if commercial bank deposits were permitted backing assets for systemic stablecoins. We also consider that a broader set of assets would introduce significant financial risks to systemic stablecoin issuers and undermine the resilience of the underlying backing asset composition, due to the value of these assets being more volatile and exposing the issuer to more pronounced channels of contagion. We have maintained our consultation position to permit systemic stablecoin issuers to monetise their sterling-denominated UK government debt securities through repurchase (‘repo’) agreements, enabling issuers to generate liquidity where needed to meet heightened redemption demand. In this Policy Statement, we clarify that such repo agreements must be of short-term (overnight) tenor, with positions permitted to be rolled. We consider that overnight maturity is necessary to limit the exposure and interconnectedness that repo transactions could create between issuers and wider systemic financial institutions, and to ensure that backing assets are realisable on an overnight basis for liquidity. We recognise the trade-off between shorter maturities and rollover risk. Accordingly, and in line with our liquidity management expectations below, we would expect the majority of the 30% deposit requirement to be met through permanent cash held by the issuer at the Bank, rather than repo proceeds. Issuers will be permitted to undertake overnight repurchase agreements and overnight reverse repurchase agreements with sterling-denominated UK government debt securities that are permissible as backing assets. footnote Opens

As an adjustment from our 2025 consultation approach, we will also permit issuers to enter into short-term (overnight) reverse repo agreements to lend liquidity not required to meet the 30% central bank deposit requirement, using sterling-denominated UK government debt securities with a maturity of up to six months as collateral. We think this will provide issuers with greater flexibility to meet their liquidity management needs and to generate a return on any liquidity above the 30% central bank deposit requirement. A systemic issuer must maintain one-to-one backing of stablecoins at all times, and therefore any reverse repo must be overcollateralised in line with standard market conventions to reflect this. Collateral haircuts must be calibrated to reflect, and appropriately price, the risk of adverse movements in collateral values, in the event of counterparty default. To limit interconnectedness with the wider financial system and to prevent the formation of collateral chains, issuers must not enter into repurchase or reverse repurchase transactions where doing so would result in the backing asset pool containing insufficient unencumbered assets to meet obligations arising under existing repurchase or reverse repurchase agreements.[6] Our requirements that issuers maintain one‑to‑one backing and use best endeavours to comply with the backing asset composition requirements are designed to support financial stability, while allowing for proportionate flexibility in exceptional circumstances. At point of reconciliation, issuers must ensure that all stablecoins in issuance are fully backed at all times, including coins in circulation and those redeemed but not yet burned. Issuers must use best endeavours to ensure that the composition of backing assets complies with the 30% central bank deposit requirement. We recognise, however, that for the 30% central bank deposits to function as a usable liquidity pool which enables issuers to meet redemption demands on an ongoing basis, temporary deviations from the 30% threshold may occur, in particular during large unanticipated redemptions or wider market stress. We expect the Bank to be notified promptly if either of the following occur:
In the event of notification to the Bank, issuers must submit a plan, informed by their liquidity contingency arrangements, setting out the steps they will take and the timeline for restoring central bank deposits to the 30% requirement. Issuers must maintain the one-to-one backing asset requirement at all times, and use best endeavours to maintain the central bank deposit requirement.

an issuer’s central bank deposits fall below 25% of backing assets required to maintain the
1:1 value, for more than five consecutive business days;
an issuer’s central bank deposits fall below 20% of backing assets required to maintain the
1:1 value. footnote
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The Bank will exercise discretion during supervisory oversight of the issuer’s timeline to restore central bank deposits to the requirement, where wider market conditions make restoration impracticable or potentially destabilising. This is to ensure the approach by issuers and the Bank’s supervisory oversight supports overall market functioning and financial stability. Alongside these refinements, we also provide further detail on our expectations of issuers’ liquidity risk management frameworks. Issuers will be required to maintain a backing assets risk management framework. This framework must include, at a minimum, a liquidity management policy that enables the issuer to identify, measure, manage and monitor liquidity risks within its backing asset pool, ensuring that redemptions can be met within the required 24-hour timeframe while maintaining central bank deposits at the 30% level. As set out above, we recognise that temporary deviations from this level may occur, particularly during large unanticipated redemptions or wider market stress.[7] The liquidity management policy should also ensure that any concentration risk, particularly in relation to repo and reverse repo use, is appropriately managed. As part of the framework, issuers must maintain a liquidity contingency funding plan setting out how they will address stress, including a market stress which may impact the number of redemptions or a shortfall against the 30% central bank deposit requirement. This is supported by requirements for regular liquidity stress testing, including testing of contingency arrangements, as well as the requirement for an issuer to have in place robust processes and systems to manage the backing asset pool effectively and prudently.[8] The Bank may request access to these documents at any time, to support ongoing supervisory oversight of the robustness of issuers’ liquidity management arrangements. Our final policy position on the 70/30 backing asset composition, together with our approach to issuer compliance with this requirement, is intended to balance support for innovation and business model viability with sufficient flexibility in circumstances beyond issuers’ control, while ensuring risks to financial stability are appropriately mitigated. Box A: Calibration of backing asset composition requirement Central to the Bank’s calibration of the backing assets composition is ensuring that systemic stablecoin issuers hold sufficient liquid assets to meet unexpected, rapid redemption requests. Holding a proportion of backing assets as central bank deposits gives issuers immediate access to funds when large volumes of stablecoins are footnote footnote Opens

redeemed over a short period of time. Without this liquidity, issuers may be unable to meet redemptions promptly, risking loss of confidence, market disruption, and the possibility that the price of the systemic stablecoin falls below par. The 2025 consultation proposed that issuers hold at least 40% of backing assets as unremunerated central bank deposits, with the remainder 60% being held in UK short term government debt securities. The proposed threshold of at least 40% deposits held at the Bank was in line with our estimates of severe but plausible short-term redemption requests. These estimates were mainly based on the outflows experienced by Silicon Valley Bank US (SVB US) and USDC in March 2023. We assessed these benchmarks alongside wider factors, including the depth of the UK short term government debt market, the risk of asset fire sales by systemic stablecoin issuers, and how other jurisdictions had approached this issue. We also wanted to ensure that the Central Bank Liquidity Facility for systemic stablecoin issuers remained a backstop as intended. This suggested a 40% minimum requirement for central bank deposits. Feedback to the 2025 consultation suggested that the proposed calibration may be overly conservative given the protections offered by the Bank’s proposed regime, despite the lack of FSCS-like insurance, which should reduce the risk and size of confidence-related runs. Feedback also highlighted that no fiat-backed stablecoin has experienced a 40% day-one run. A number of respondents also noted the impact that a large unremunerated proportion of backing assets would have on business model viability and the competitiveness of the UK regime. We assessed this feedback carefully and considered alternative calibrations. While we believe that the March 2023 events provide a reasonable indication of day-one outflow rates, withdrawals were highly correlated. There was significant concentration in the depositor base of affected banks, which was mainly dominated by tech firms and venture capital corporate depositors. While it is hard to predict, it is not clear that systemic stablecoin holders would have a similar level of user concentration. With a more diversified user base, withdrawal behaviour is likely less correlated, indicating that a 40% outflow assumption might be conservative. We looked at alternative benchmarks, including:

other episodes of bank liquidity stress;
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We also looked at the adjusted liquidity coverage ratio (LCR) outflow rates applied to retail and corporate uninsured deposits in the bank liquidity framework. Based on this analysis we will now allow a lower unremunerated central bank deposit minimum requirement of 30%, bringing the framework more closely into line with historical episodes of liquidity stress while continuing to provide a credible and resilient liquidity anchor. Allowing less than 30% in central bank deposits, however, could mean that issuers would not have enough instantly available funds to manage sudden large redemption requests posing potential financial stability risks. There is limited history of stress in stablecoins, but there are factors to suggest that withdrawals from stablecoins could happen quickly. These factors include their programmability, where users could instruct automatic withdrawals conditional on events and their public nature, meaning that runs may be both easier to observe in real time and faster in practice. The March 2023 events also highlighted the speed and scale at which outflows can occur, and the role that social media can play in accelerating withdrawals. And while the Bank’s regime does offer significant protections for coinholders including in insolvency, the lack of coinholder insurance is likely to remain an important factor for coinholders in a stress. Alongside central bank deposits, firms will be permitted to hold up to 70% of backing assets in UK short term government debt securities with a remaining maturity of up to six months. We consider this minimises price volatility and ensures that backing assets remain stable in value and low risk. This, however, creates an interdependency with the UK government debt market. In a stress scenario, an issuer with insufficient liquidity and facing unexpected and rapid redemption requests may be forced to sell assets at a discount, undermining the one-to-one backing of the systemic stablecoin and creating further stress in government debt markets. Access to same-day liquidity would also not be feasible through the sale of UK government debt securities, given the T+1 settlement cycle. Although issuers will be able to engage in repo and reverse repo operations to enhance flexibility in liquidity management, there would also be a dependency on well-functioning secondary markets.

historical experience of redemptions from established fiat-backed stablecoins;
liquidity requirements for money market funds and narrow banks with paymentsfocused business models;
alternative calibrations proposed in the feedback to our consultation.
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This MIT (2026) paper shows that solvency is a necessary but not sufficient condition to maintain par-value convertibility and that liquidity is key to achieve this. Under normal market conditions, redemptions are typically processed at par without delay. However, during stress events – when redemption demand surges and issuers must liquidate assets – the stability of par value convertibility is tested. At such times, the issuer’s ability to maintain par depends on the liquidity of the underlying assets that must be sold to meet redemptions. If these assets consist primarily of government debt securities, the market infrastructure can potentially become overwhelmed by the volume of selling orders, leading to price dislocations or delayed transaction processing. While the paper focuses on the US market, similar dynamics could be expected in the UK, where the T-bill market is shallower. Such dynamics could affect confidence in systemic stablecoins, likely reinforcing redemption pressures and run risk. Concentration of these assets within systemic issuers could also create broader financial stability risks in the event of asset fire sales, particularly if multiple issuers were required to liquidate holdings at the same time. HMT and the DMO have recognised the importance of the resilience and liquidity of Tbill secondary markets to support issuers’ access to a well-functioning market. HMT and the DMO have also announced measures to expand and deepen the T-bill market, noting that they will remain responsive to evolving demand, including from sterling-denominated stablecoins. Issuers will be permitted to raise liquidity through repo operations. This reduces the likelihood of firms relying on outright asset sales to raise liquidity which could alleviate pressures in short-term government debt markets in stress. Issuers will also be permitted to undertake overnight reverse repo transactions, providing additional flexibility for liquidity management. We believe that when the Bank’s regime is looked at holistically – including the provision of a central bank deposit account and the liquidity backstop facility – the 30% central bank deposit share is proportionate and underpins safety and confidence in money and payments. Opens Opens

We do not intend to remunerate deposits held at the Bank. The Bank’s policy around paying interest on reserves has always been tied to monetary policy transmission. Since stablecoins are not involved in monetary policy transmission – issuers are not permitted to pay interest to coinholders and they will not extend credit – they will therefore not be remunerated. Our analysis suggests it is possible for stablecoin issuers to have a viable business model while having 30% of backing assets held as unremunerated central bank deposits in steady state. We have undertaken some sensitivity analysis using different assumptions around the level of interest rates, size of balance sheets and operating expenses and have concluded that the 30% central bank deposit share is consistent with business model viability. Feedback to the 2025 consultation was mixed. Many respondents argued the 40% unremunerated central bank deposit requirement would constrain commercial viability, and could lead to higher user fees, reduced innovation, and weaker adoption. Others, however, viewed the 60/40 split as striking the right balance between ensuring business model viability through revenue from UK government debt holdings and safeguarding against liquidity risk. Separately, while we recognise that existing stablecoin business models are almost entirely reliant on interest income from backing assets, this does create longer-term risks from the dependency of business models on interest rates which issuers would need to monitor to ensure business continuity. 2.1.2: ‘Temporary issuance guardrail’ on the level of issuance per systemic stablecoin Proposed approach in the 2025 consultation paper We considered that transitional policy measures are needed to mitigate risks to provision of credit to the UK economy. We proposed that issuers implement per-coin holding limits of £20,000 for individuals and £10 million for businesses, with exemptions possible for larger businesses. Opens

These limits were calibrated using the analytical framework set out in the following FS Staff Paper. This analysis also considered usability of stablecoins under the proposed limits. We remained open to views on alternative tools that could help achieve our desired outcomes, namely avoiding a disorderly transition, safeguarding financial and monetary stability, and preserving access to credit, while at the same time, not stifling innovation in payments and money. Consultation feedback A majority of respondents highlighted significant operational concerns with implementing holding limits. Respondents also noted the investment may not be justified for a tool intended to be temporary. Business limits were seen as too restrictive and inconsistent with emerging use cases, with requests for clarity on how exemptions would work in practice. On alternatives to holding limits, some preferred issuance caps or macroprudential tools, including strengthened bank capital and liquidity requirements, risk-based stress testing, counter-cyclical buffers and ‘emergency brakes’ to prevent bank deposits funding new stablecoin issuance during crises. There was also a preference for using tools only when risks have crystallised. The FSRC recommended that the Bank reconsiders its approach to holding limits. The Bank’s response and updated policy approach In line with feedback from respondents, we will not implement per-coin holding limits for individuals and businesses, recognising the significant operational challenges, as well as disruption to potential use cases, which respondents indicated these measures would have imposed. Temporary issuance guardrail We will instead introduce a temporary guardrail on the level of issuance per systemic stablecoin product,[9] as a transitional measure to mitigate the risks to credit provision. footnote Opens

We will allow each systemic stablecoin to be subject to an initial maximum issuance of £40 billion. Individuals and businesses will be able to use systemic stablecoins without limits on the size, frequency or type of transaction (other than where this is prevented by other legislation or regulatory requirements). We will regularly review the guardrail, and we expect to loosen, and ultimately remove the guardrail once we are satisfied that the risk to credit provision has been effectively mitigated. The temporary issuance guardrail has been calibrated using the same analytical framework used to quantify the proposed holding limits and is therefore expected to deliver a broadly equivalent level of risk mitigation to credit provision. The rules reflecting these policy positions can be found in Part 7: Temporary Issuance Guardrail (Annex G of Code of Practice). We have carefully reviewed respondents’ feedback on our proposal to use holding limits on individuals and businesses to manage the risks to credit provision. Respondents have provided valuable insights on the technical challenges with implementation and enforcement, which require bespoke smart contracts, coordination between multiple entities in the stablecoin ecosystem, or new digital identity solutions that create additional privacy issues. Stakeholders also highlighted concerns around proportionality, noting that the costs and complexity of implementing holding limits would be high, particularly for a tool intended to be temporary. A number of respondents also highlighted the impact on usability of systemic stablecoins for both individuals and businesses where important use cases – especially for businesses – might not be possible under the proposed business holding limits, and challenged the effectiveness of an exemption regime for business limits. Overall, there were mixed views on the need to mitigate against the risks to credit provision from systemic stablecoins. Some respondents felt that risks from large scale stablecoin adoption would be manageable and that the system would adjust safely, while others agreed that these risks should be managed proactively. Opens

There was little feedback on the right tool to manage the risks to credit provision. Some respondents suggested that the Bank should only use tools once risks became apparent while others suggested macroprudential tools or issuer-level caps as alternative ways to manage this risk. This feedback aligns with the FSRC calls for the Bank to ensure that any requirements are practical and can be implemented in a way that would enable the Bank to achieve its objectives. In light of this feedback, we have reassessed our approach. We recognise the strength of industry evidence on the practical challenges and costs associated with holding limits, and agree that these are substantial. The Bank continues to believe there are risks to credit provision from a disorderly adjustment to new forms of money. The UK real economy remains heavily reliant on banks for credit – much more so relative to other comparable jurisdictions. Any transition to new forms of money therefore needs to be orderly and must not come at the cost of a precipitous fall in access to credit by households and businesses. We considered feedback carefully and assessed whether other tools could achieve similar outcomes while addressing concerns. We considered transaction limits on the banking sector and ‘adjustments’ to holding limits such as higher limits and ex-post implementation. We ruled out these options for the following reasons.Transaction limitswould not prevent repeated transactions and rapid and sizeable loss of bank deposits flowing into stablecoins,whereas ‘adjustments’ to holding limits would face the same implementation challenges. Given feedback on implementation, we did not think that implementing limits once risks crystallised was feasible given the complexity of retrofitting them to existing systems and the inevitable long lead time that would entail. Issuers would also find it challenging to manage unpredictable major changes to the regulatory regime. We propose to set the starting level of the issuance guardrail at £40 billion per systemic stablecoin product. We used the analysis underpinning the holding limit calibration to calibrate the new temporary issuance guardrail, ensuring similar outcomes. On this basis, we have concluded that holding limits would not be justified as a proportionate, or effective, means of achieving our policy objectives to manage the risks to credit provision. We have decided to introduce a temporary guardrail on the level of issuance per systemic stablecoin as a transitional measure to mitigate the risks to credit provision. Each systemic stablecoin will be subject to an initial issuance maximum of £40 billion. Opens

The issuance guardrail will be significantly less complex to implement. Individuals and businesses will be able to use systemic stablecoins without restrictions on the size, frequency or type of transaction (other than where this is prevented by other legislation or regulatory requirements). The issuance guardrail does introduce a new risk, which is the possibility of ‘de-pegging’ if the demand for a stablecoin outweighs supply. De-pegging risk could materialise if users shift into stablecoins at scale, resulting in demand for the systemic stablecoins exceeding supply, pushing secondary market prices above par value. We think this risk is manageable. While such behaviour is hard to predict, a sustained, large‑scale flow would likely be needed into a systemic stablecoin to push its price above par. The issuance guardrail is intended to be a temporary measure. We will regularly review the issuance guardrail, and we expect to loosen, and ultimately remove such guardrail by revoking the Temporary Issuance Guardrail Part of the draft Code of Practice once we gauge stablecoins’ real-world impact, including how banks are adjusting their funding models and are satisfied that the risk to credit provision has been effectively mitigated. The proposed £40 billion issuance guardrail should not be taken as an indicator of the point at which HMT may recognise a stablecoin issuer as systemic. Under Part 5 of the Banking Act, working with the Bank and the FCA, HMT is responsible for deciding which payment systems using stablecoins and service providers are recognised as systemically important and would therefore fall within the Bank’s remit. We set out in the draft Code of Practice our expectation that if an issuer breaches, or is reasonably expected to breach, the temporary issuance guardrail requirement:
We will also introduce requirements for record-keeping in future to enable issuers to monitor and demonstrate compliance with the temporary issuance guardrail.

it must notify the Bank as soon as possible with the details of the relevant systemic
stablecoin product and product total, and submit a plan informing the Bank of the steps it will take, and the timeline, for returning to compliance. Opens

Box B: Calibration of the ‘temporary guardrail’ on the level of issuance per systemic stablecoin The Bank continues to believe there are risks to credit provision from large, rapid outflows in transition from bank deposits to stablecoins. We have published a separate paper which quantifies these risks and calibrates holding limits as a tool to address them. The 2025 consultation proposed temporary holding limits of £20,000 for individuals and £10 million for businesses – including an exemptions regime for businesses requiring balances above it in the course of doing normal business – as a tool to mitigate these risks. Feedback to the 2025 consultation highlighted holding limits were challenging and costly to implement, especially considering that they are intended to be temporary. We recognise the strength of industry evidence on the practical challenges and costs associated with holding limits and agree that these are substantial. In light of this feedback, we have reassessed our approach and have decided to introduce a temporary guardrail on the level of issuance per systemic stablecoin product as a transitional measure to mitigate the risks to credit provision. With this, each systemic stablecoin will be subject to an initial issuance maximum of £40 billion. Approach to calibrating the temporary issuance guardrail To calibrate the £40 billion guardrail, we have used the same analytical approach that was used to calibrate the previously proposed holding limits. Therefore, the guardrail is expected to provide the same level of protection against risks linked to credit provision. In line with the holding limits analysis, we modelled a severe illustrative stress to assess the potential impact of flows from commercial bank deposits into systemic stablecoins across different risk metrics. These included: (i) the number of firms that fall below their 100% liquidity coverage ratio (LCR) as a proxy for bank liquidity stress; (ii) additional demand for central bank lending; and (iii) firms’ asset sales representing the liquidity shortfall to the 100% LCR, which could increase the risk of cuts to banking lending to the real economy. It assumes a low initial uptake of systemic stablecoins, consistent with the guardrail applying in the early stages of development of this market. Opens

This analysis suggested that a temporary issuance guardrail of £40 billion would help deliver a similar level of risk mitigation across the key metrics. In addition to effective mitigation of risks to credit provision, a key consideration for the calibration of the temporary issuance guardrail was to ensure it supports business model viability and does not necessarily restrict usability. We believe that a £40 billion guardrail will allow systemic stablecoins firms to run viable business models and support daily volume of transactions comparable to other systemic payment systems currently operating in the UK (around £1.4–£2.2 billion Faster Payments and card schemes daily average). It also represents around 10% of average daily values processed by CHAPS.[10] It would also allow systemic stablecoins to be used for the cash leg of the Digital Securities Sandbox without undue restriction, where aggregate limits per asset class range between £4.4–£28 billion. The issuance guardrail is intended to be a temporary measure. We will regularly review the initial calibration of £40 billion, and we expect to loosen, and ultimately remove the guardrail once we gauge stablecoins’ real-world impact, look at how banks adjust their funding models and are satisfied that the risk to credit provision has been effectively mitigated. 2.2: Policy clarification 2.2.1: Capital, liquid assets and reserve requirements Proposed approach in the 2025 consultation paper We proposed to use existing international standards (the CPMI-IOSCO Principles for Financial Market Infrastructure , PFMIs) as a baseline for calculating capital requirements for general business risk of systemic stablecoin issuers, with some modifications to account for shortfall risk to coinholders and lack of comprehensive arrangements to manage issuers’ failure. Issuers will need to hold capital against general business risk, and reserves held on trust to mitigate financial risk and cover wind-down costs. Issuers’ capital, assets funded by capital, and reserves of liquid assets for financial risk and insolvency/wind-down risk must be held in the UK. footnote Opens Opens

Consultation feedback
Respondents generally agreed that the proposed approach is proportionate and risk based. However, respondents highlighted the need to consider the overall burden of capital and related requirements (such as statutory trust and backing assets) on the competitiveness of the UK regime. Respondents requested further details and guidance on the application of the requirements including measures to avoid duplication where capital and reserves are held against similar risks. Respondents asked the Bank to consider whether a broader range of liquid assets could be permitted for general business risk and wind-down reserve requirements, subject to appropriate haircuts. Respondents requested clarity on transition timelines for non-systemic stablecoin issuers moving from the FCA’s requirements to the Bank’s requirements when they are designated as systemic. Respondents suggested that a simpler approach could be considered for smaller systemic at launch issuers under the proposed ‘step-up’ approach. Respondents requested clarification of the Bank’s approach to capital requirements for stablecoin issuers that are part of a PRA-regulated group. The Bank’s response and updated policy approach We will continue to use the PFMIs as the baseline for capital requirements for general business risk of systemic stablecoin issuers. We have updated our approach to reflect the supplementary guidance set out in the CPMI-IOSCO consultative report on further guidance to the PFMI for general business risk and general business losses management (‘CPMI-IOSCO guidance’) and to avoid duplication of resources where capital and reserves would otherwise be held against similar risks. To promote consistency between issuers’ capital and reserve calculations, we will require systemic stablecoin issuers to conduct an overall risk assessment to identify, monitor, measure and mitigate risks. This must be supported by robust systems and processes, strong governance, appropriate documentation, and notification requirements. Opens Opens

Capital
The minimum capital requirement is set as the higher of:
To ensure issuers can implement recovery and orderly wind down at all times, issuers must notify the Bank when their capital falls below 110% of the minimum requirement. To ensure that capital is permanently available for risk absorption, issuers should exclude intangible assets and other non-loss absorbing elements from regulatory capital (similar to Common Equity Tier 1 (CET1) capital). To ensure that issuers can absorb losses or implement recovery and orderly wind down without a delay, issuers must invest their regulatory capital in assets that are sufficiently liquid and of high quality for the risks they are intended to mitigate. Reserves of liquid assets held on trust Issuers must maintain reserves of liquid assets under two statutory trust arrangements to protect coinholders against losses arising from financial risks to the backing assets, and from issuer failure or insolvency. We have updated the financial risk reserve to capture risks arising from repurchase and reverse repurchase transactions of the short-term UK government debt held as backing assets. We have also added a new component to cover the counterparty credit risk arising from such reverse repurchase transactions. We maintain our policy that the issuer’s capital, assets funded by capital, and reserves of liquid assets held for financial risk and insolvency/wind-down risk must be held in the UK. The rules reflecting these policy positions can be found in Part 4: Capital and Reserves (Annex D of Code of Practice).

Six months of the issuer’s relevant operating expenses; or
The cost of executing its recovery plan and its orderly wind-down plan, excluding
costs provided for in the wind-down reserve.
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Capital, liquid assets and reserve requirements for systemic stablecoin issuers aim to ensure that firms have adequate financial resources for the risks they undertake. These risks include both general business risks[11] as well as risks to coinholders in the event of failure.[12] These financial resources must be adequate in both quality and quantity to ensure that issuers can continue as going concerns in normal times and, in stress or failure, can recover and[13] wind down in an orderly manner, minimising losses to coinholders and disruption to critical services.[14] Respondents to our 2025 consultation broadly supported our proportionate and risk-based approach to capital. Most respondents requested further details on the application of the requirements and supported consistent application. Some also highlighted the need to consider the cumulative impact of the overall policy package on viability. In this publication we provide further detail on our policy positions, including refinements made since the 2025 consultation and how these are reflected in the draft rules. We maintain our risk-based approach to capital, allowing requirements to be tailored to issuers’ business models and risk profiles. We do not consider a banking-style capital framework or fixed ratio-based requirements – as suggested by some respondents – to be appropriate for systemic stablecoin issuers. However, where relevant, we have drawn on elements of the banking capital framework to quantify certain financial risk components, consistent with the principle of same risk, same regulatory outcome. It is too early to consider surcharges for globally significant stablecoin issuers as suggested by some respondents. For firms that are designated systemic at launch and are subject to the proposed step-up approach, we will apply the capital requirements proportionately. Where such firms hold a higher proportion of short-term UK government debt as backing assets, they will hold correspondingly higher financial risk reserves. In areas where they have lower risks compared to other firms, we may use our powers of direction under section 191 of the Banking Act 2009 to apply the requirements proportionately, on a case-by-case basis.[15] This approach is intended to support innovation while maintaining appropriate risk mitigants. Capital requirement We have refined our approach to reflect the CPMI-IOSCO guidance,[16] and to avoid double counting of risks across the general business risk and wind-down reserve. Accordingly, we require that systemic stablecoin issuer hold capital, at a minimum, sufficient to meet the higher of:
We continue to require that issuers hold capital against general business risk, and reserves to mitigate financial risk and to cover wind-down costs. footnote Opens

The issuer’s recovery and orderly wind-down plans must consider severe but plausible[17] stress scenarios relevant to its business models. As a safeguarding measure, costs associated with returning or transferring of coinholder funds and insolvency related expenses[18] must be held in the wind-down reserve held on trust. These segregated amounts are excluded from the general business risk capital calculation. We have clarified in the draft Code of Practice what may be deducted from relevant operating expenses, the minimum content of recovery and orderly wind-down plans, and the expectation that firms must be able to wind down in an orderly manner where recovery fails or is not feasible. We recognise the challenges identified by some respondents relating to measuring novel risks such as smart contract vulnerabilities and ledger failures, given limited historical data. In addition, CPMI-IOSCO guidance highlights the risk that small but frequent unexpected losses may lead to breaches of minimum requirements, potentially undermining FMIs’ ability to recover and wind down in an orderly manner.

six months of a stablecoin issuer’s relevant operating expenses; or
the cumulative costs of executing the recovery plan and the orderly wind-down plan,
excluding costs provided for in the wind-down reserve.
Figure 2: Capital and reserve asset requirements for issuers of systemic
payment stablecoins
To address these risks, issuers must notify the Bank when their capital falls below 110% of the minimum requirement. footnote footnote Opens

We calibrated the notification threshold to ensure that systemic issuers maintain the ability to recover and wind down in an orderly manner at all times. We maintain our position that regulatory capital should have the highest level of loss absorption and be free from intangible assets and other non-loss-absorbing components. This is consistent with the characteristics of CET1 capital required for authorised deposit takers and investment firms. Issuers must notify the Bank if they make changes to their regulatory capital. To ensure that an issuer can absorb losses and fund its recovery or orderly wind-down plan without delay, we propose the capital to be invested in sterling-denominated liquid assets. These may include cash; central bank money; UK government debt; on-demand deposits with UK commercial banks; units or shares in UK short-term money market funds; and repurchase and reverse repurchase transaction assets secured on UK government debt. Issuers must value such assets prudently, including by applying appropriate reductions where an asset’s maturity exceeds the period in which it may need to be liquidated. Because our capital and reserve requirements are largely based on the outcomes of each issuer’s internal risk assessment, we will introduce requirements to ensure issuers have robust systems and processes, with strong governance and controls commensurate with their size and risk profile of the firm. Accordingly, issuers are required to conduct regular stress testing and scenario planning to anticipate risks and identify scenarios in which they are required to implement recovery and wind down. The risk assessment must assess the adequacy of financial resources of the firm to recover from severe but plausible loss events, and strategies[19] for orderly wind down if recovery fails or is not feasible. When the issuer is part of a group, any risks arising due to the issuer’s membership of the group must be considered in the risk assessment. To avoid duplication of resources and risk covered by capital and reserves, we require issuers to provide a breakdown of the orderly wind-down plan, separating costs that are covered by the wind-down reserve from other wind-down related operating expenses that are considered in the general business risk calculation. We propose that the issuer’s governance body should review and approve the overall risk assessment and capital and reserve planning process, which should be supported by robust organisational controls to ensure the accuracy of information and, where relevant, external The overall risk assessment requirement introduces rules to ensure capital and reserve planning process is robust, consistent, and transparent. footnote Opens

validation (for example, of the wind-down plan). We also introduce requirements for documentation, record-keeping, and notification to the Bank where the issuer has breached, or is likely to breach, minimum requirements, together with plans to restore compliance. Financial risk reserve and wind-down reserve Respondents were broadly supportive of the reserve requirements, noting the need to protect coinholders’ interests if an issuer fails and to address risks arising from holding short-term UK government debt as permitted under the backing assets policy. We have updated the financial risk reserve to capture the risks arising from repurchase and reverse repurchase transactions of short-term UK government debt permitted as backing assets. This includes a new component to mitigate the counterparty credit risk of such reverse repurchase transactions. We consider that these components provide an appropriate level of resilience for backing assets at this stage. The Bank will continue to assess whether additional elements, including in respect of counterparty credit risk arising from repo transactions, should be incorporated as part of future policy development. We have also provided further clarity on what is included in the wind-down reserve, as set out below:
The financial risk reserve is intended to cover the following risks to ensure that par value of the stablecoin is maintained:
We continue to propose that issuers hold reserves of liquid assets to mitigate financial risks in backing assets and to protect coinholders in insolvency or wind down. These reserves should be held on statutory trust.

interest rate risk of the short-term UK government debt in the backing asset pool,
excluding the amount of reverse repo collateral assets, but including short-term UK government debt that formed part of backing asset pool which have been used to enter into repurchase agreements that remain outstanding, measured using the relevant parts of the simplified standardised approach for market risk of the PRA rulebook including the multiplier for interest rate position risk (currently at 1.3). This component must be met by central bank money; Opens
cost of liquidating or monetising short-term UK government debt in the backing asset
pool measured as a percentage of such short-term UK government debt where that percentage is the haircuts that would apply under the proposed Central Bank Liquidity Facility. Together with the market risk component, this is intended to minimise the risks to coinholders where both the value of backing assets falls and those assets need to be monetised either in private markets or through the proposed Central Bank Liquidity Facility; Opens

The wind-down reserve is intended to mitigate risks to coinholders in the event of issuer’s failure. This must cover the cost of returning funds to coinholders or transferring them to another service provider and costs incurred in insolvency including amounts payable to an insolvency practitioner or special administrator appointed under the applicable special administration regime.[20] We adjusted this requirement incorporating responses to the 2025 consultation with a view to avoid duplication of resources held in capital and reserves for similar risks. The wind-down reserve will now cover the costs of returning funds to coinholders or transferring them to another service provider.[21] In the event of an issuer’s failure, it will now also cover the costs payable to insolvency practitioners or a special administrator. This is to ensure such assets are held exclusively for this purpose and are protected from other assets of the issuer in the event of failure. Other expenses for an orderly wind down are now expected to be factored in when determining the general business risk capital.[22] Permitted liquid assets for the wind-down reserve are sterling-denominated cash; central bank money; UK government debt; on-demand deposits with UK commercial banks. Box C: Illustration of calculation of capital and reserve requirements for a stylised stablecoin issuer Disclaimer: The figures presented in this illustration are hypothetical and are used solely to demonstrate the methodology. They carry no supervisory significance and should not be interpreted as a reference point or benchmark for determining a firm’s capital or reserve requirements. Company A (ACo) is the issuer of a systemic stablecoin (ACoin) in the UK. There are 40 billion ACoins issued, backed by £40 billion worth of backing assets as follows:

counterparty credit risk of reverse repurchase agreements using money that formed part
of the backing asset pool, measured using the relevant parts of the Financial Collateral Comprehensive Method in the Credit Risk Mitigation (CRR) Part of the Prudential Regulation Authority (PRA) rulebook; and Opens
the reserve held to cover the cost of liquidating or monetising backing assets, and
counterparty credit risk components can be met by central bank money and UK short-term government debt, similar to those permitted as backing assets. footnote Opens

ACo has the following outstanding secured financing transactions related to the backing pool:
ACo’s relevant[23] annual operating expenses are £384 million. ACo’s overall risk assessment shows the following:

£28 billion of Sterling-denominated short-term UK government debt comprising; £14
billion with maturity less than 1 month, £8 billion with maturity of 1–3 months and £6 billion with maturity of 3–6 months.
£12 billion in central bank money.
repurchase (repo) transactions using £2 billion of its government debt securities
(with maturity 3–6 months), which remain outstanding; and
reverse repurchase agreements under which ACo lends cash from the backing
asset pool and receives £1 billion of government debt securities (with maturity 3–6 months) as collateral from counterparties rated equivalent to credit quality step 2.
in severe but plausible loss events, execution of recovery plans cost around £120
million to £136 million of ACo’s own funds. Accordingly, ACo’s largest need for own funds to implement recovery plans is £136 million;
if recovery is not feasible, ACo’s most effective wind-down strategy is to return
funds to coinholders. This would require £z1 in distribution costs, and £z2 in insolvency-specific expenses if ACo enters insolvency (Assume Z = z1 + z2). Other wind down related expenses are £128 million. footnote Opens

Table 1: Calculation of ACo’s capital and reserve requirement (in £ millions)
Wind-down reserve requirement £Z
Insolvency-specific wind-down costs £z1
Cost of returning funds to coinholders £z2
Financial risk reserve requirement £197
Interest rate risk (simplified standardised approach, applied to short-term government debt securities in backing asset pool)(a) £57 Monetisation risk (price impact) component (Short-term government debt securities in backing asset pool x central bank liquidity facility haircut)(b) £140 Counterparty credit risk (financial collateral comprehensive approach, applied to reserve repo transactions) £0.08 Total reserves held on trust for risks to coinholders £197

£Z
Capital requirement (at the higher of) £264
Six months of relevant operating expenses £192 Cost of recovery plan (£136) + orderly wind-down plan (Z + £128) – wind-down reserve (Z) £264 Total capital and reserve requirement £461
£Z
2.2.2: Safeguarding and trust arrangements
Proposed approach in the 2025 consultation paper Source: Bank of England. (a) Excluding short-term government debt securities that have been received from reverse repo but including shortterm government debt securities that have been used in outstanding repo. (b) Central Bank liquidity facility haircuts are not yet determined. For this example, we assume it to be 0.5%. Opens

Backing assets should be segregated and held in a statutory trust for the benefit of coinholders. Robust safeguarding requirements for backing assets, including that issuers must appoint qualified third parties for the safeguarding of backing assets, other than for those held with the Bank. Consultation feedback Most respondents supported a statutory trust arrangement, though a minority preferred a less prescriptive approach to achieve outcomes. There was no clear preference on the structure of the trust. Responses on the safeguarding requirements focused on the identity of third parties holding safeguarded money and assets and retention of excesses. Respondents also considered alignment between the Bank and the FCA requirements to be an important factor. The Bank’s response and updated policy approach We will proceed with the statutory trust mechanism. There will be two trusts, one to protect coinholders’ interests and the other to cover the costs of returning value to them. HMT has agreed to introduce legislation to give the Bank enabling powers to impose statutory trusts. We have sought to align safeguarding requirements with the FCA’s for issuers of qualifying stablecoin where possible. The joint publication with the FCA, which we intend to publish shortly, will address alignment, transitional and joint regulation issues in further detail. Our safeguarding requirements will also require issuers to segregate money and assets that form backing assets and reserves, allocate incoming payments promptly, perform daily reconciliation processes, and appoint third party custodians to hold money and assets. We will allow excesses to be retained, up to 5% of the value of the stablecoin pool in the backing asset pool, and no limits to excesses retained in reserves. Opens

We will only require third party custodians to be separate legal entities, rather than completely unconnected to the issuer’s group. However, due diligence and diversification requirements will apply for the selection and review of third parties. The rules reflecting these policy positions can be found in Part 3: Safeguarding and Trust Arrangements. (Annex C of Code of Practice). In our 2025 consultation, we proposed that the safeguarding requirements would comprise segregation and statutory trust mechanisms. This was intended to ensure that backing assets and reserves are safeguarded for coinholders, underpinning confidence in stablecoins as a form of money and that they are fully backed 1:1 and supported by high‑quality assets. Money and assets forming backing assets and reserves would be held on trust for the benefit of coinholders, and the issuer would be required to appoint qualified third parties to hold money and assets other than those held with the Bank. The majority of respondents who commented on the statutory trust supported the Bank’s proposals and agreed that it would provide the necessary protection for coinholders’ interests. However, a minority of respondents argued that a statutory trust would be too prescriptive. They instead preferred an outcomes-based regime where issuers would be free to take their own steps to achieve segregation. Responses were divided between the different trust structures. Respondents who preferred a single trust emphasised the need for simplicity. On the other hand, respondents who preferred multiple trusts identified the clarity separate trusts would provide between different assets and reserves in terms of purposes and beneficiaries. Other respondents thought that issuers should be allowed to choose their own trust structure. Many respondents also provided feedback on specific safeguarding requirements. They ranged from comments on reconciliation, the retention and withdrawal of money and assets that exceed the required levels, and the appointment of third-party custodians. Finally, several respondents emphasised the need to align with the FCA’s requirements to avoid a complicated transition into joint regulation. We will proceed with a statutory trust arrangement for our safeguarding requirements. Opens

Having considered the responses, we maintain that a statutory trust arrangement is the best legal mechanism for safeguarding backing assets and reserves and will proceed with setting requirements for one in our safeguarding regime. For the reasons below, we do not consider the alternative approaches offer sufficient protection for coinholders. We have chosen a statutory trust as the basis of the safeguarding requirements for several reasons. As set out in our 2025 consultation, a statutory trust clearly separates money and assets and protects them against the claims of the issuer’s general creditors even in an issuer’s failure. It also places the issuer in the role of trustee, giving rise to fiduciary duties to act in the best interests of coinholders as beneficiaries. This feature is not available in alternative mechanisms not involving a trust. A statutory trust also operates automatically, without requiring issuers to put in place bespoke arrangements (which may vary in effectiveness) and is based on standardised terms set out in the Code of Practice governing how backing assets and reserves are held. This provides greater transparency and clarity regarding coinholders’ rights and protections. In addition, UK trust law is widely used, including in cross‑border contexts, and provides a clear and established framework for the duties and responsibilities of trustees, from which both issuers and coinholders can benefit. The statutory trust arrangement aligns with the FCA’s policy on safeguarding, which similarly imposes a statutory trust over stablecoin backing assets, modelled on its client money regime. This alignment means that firms operating within the FCA’s regime as well as the coinholders will already be familiar with the mechanism, and helps to reduce friction for issuers transitioning from the non‑systemic to the systemic regime. The legal structure provides a clear distinction between money and assets used to fulfil requirements on backing assets and reserves (such as maintaining 1:1 backing) on a day-today basis, and those used to wind down the systemic stablecoin, including returning par value to the coinholders in that event. The trusts will comprise:
We will impose two trusts, to distinguish between the purposes of protecting coinholders’ interests and covering the costs of returning value to coinholders.

a trust over backing assets and the financial risk reserve for each systemic
stablecoin product. The trust will be held primarily for the benefit of holders of systemic stablecoins, with each holder’s claim equal to their holding. The issuer can use the property in this trust to raise liquidity through repurchase transactions;
a trust over the wind-down reserve.[24] The trust will be held primarily for the costs of an
insolvency practitioner in the event of the issuer’s failure, payments for operationalising a return to coinholders or transferring the business to another service provider (which will be footnote Opens

The issuer will be a beneficiary in each trust, but only after all other stated costs have been met. It will also be able keep interest or income generated from trust money or assets for itself, where doing so is consistent with its legal and regulatory obligations (including the safeguarding requirements). Under the trusts, the issuer will not be able to remove, grant any recourse against, or otherwise use for itself money or assets in the trusts, other than to give the Bank an interest or right over pre-funded settlement accounts (so funds are available for settlement in a payment system), or as allowed in the Safeguarding Part of the Code of Practice. Issuers will be able to use trust assets to access the proposed Central Bank Liquidity Facility. The Bank intends to introduce a Central Bank Liquidity Facility to provide liquidity to issuers to support the processing of redemptions by coinholders. We expect that issuers will be able to use trust assets to access this facility. We will at a later date consider consequential amendments to the Safeguarding Part of the draft Code of Practice to set out how such trust assets can be used to access the facility. HMT has agreed to give the Bank enabling powers for statutory trusts. Our policy on the statutory trusts is dependent on legislative provisions enabling the Bank to impose them over backing assets and reserves. HMT has agreed in principle to introduce that legislation. We are working closely with HMT to provide the necessary information for the development of these legislative provisions. Our safeguarding regime will require the segregation of money and assets in distinct asset pools, and specify how money received or generated in connection with them must be treated. All respondents commenting on safeguarding arrangements agreed with the principle of protecting coinholders by segregating backing assets and reserves from the issuer’s own money and assets. Therefore, we will require money and assets from each distinct asset pool (being backing assets, the financial risk reserve, and the wind-down reserve) to be separated from the issuer’s own funds. Where an issuer has multiple stablecoin products in issuance (systemic or otherwise), the backing assets and financial risk reserve of each systemic stablecoin product must be segregated from those of other stablecoin products. available in solvent wind downs), and to make up for any shortfall in the backing assets pool. Opens

Where an issuer receives payment for a systemic stablecoin, it must be paid promptly into the issuer’s backing funds account. Where funds are received or placed as proceeds of assets held or settled through a settlement system, it may not always be possible for these proceed funds to be moved directly between the settlement system and an account with the Bank. Where that is the case, proceeds of an asset from an asset pool (‘proceed funds’) must be paid promptly into a separate proceed funds account, which is a commercial bank account. Proceed funds related to a wind-down reserve asset can be paid straight into a wind-down reserve funds account.[25] Proceed funds include coupon income from, redemption of, or proceeds in connection with the sale or purchase (outright or as part of a repo or reverse repo transaction) of UK government debt securities. Money in proceed funds accounts do not form part of any asset pool, but will form part of the same statutory trust as the asset that generated those proceed funds. Issuers must only remove proceed funds from a proceed funds account to meet redemption requests (for proceed funds generated in connection with backing assets), transfer them into the same asset pool as the asset which generated the proceed funds, or use them to purchase an asset. This must be done as soon as possible. Where the value of an asset pool exceeds the minimum required level, we will allow issuers to retain those excesses in the same asset pool. We have considered feedback from respondents about the treatment of funds or assets that exceed the required value in asset pools – for example, through income from backing assets or from market fluctuations. This feedback considered that allowing excesses reduces operational friction and enhances protection against unexpected shocks or shortfalls. Therefore, we are allowing issuers to retain up to 5% of the value of the stablecoin pool, defined as coins in issuance, including coins that have been redeemed but not yet burned, as excess in the backing asset pool. There will be no limit of the value of the excess that can be kept in the financial risk reserve or the wind-down reserve. We will require issuers to carry out both an internal and external reconciliation at least once each business day for each of its asset pools and to resolve discrepancies. The purpose of reconciliation is for an issuer to ensure that it has met the relevant requirements for an asset pool, can ascertain the value of money and assets held in each asset pool, and has accurate internal records and accounts about each asset pool that match those of third parties holding money and assets for it. footnote Opens

Discrepancies in each asset pool, such as those identified in the reconciliation process, must be resolved as soon as possible and no later than the end of the business day in which the issuer identifies the discrepancy, by paying in or withdrawing funds. Where the discrepancy is between the values of the stablecoin pool and the backing asset pool, the issuer may resolve it instead by minting or burning coins. We will also require issuers to notify the Bank where it fails to carry out reconciliations or resolve discrepancies. Further, an issuer will be required to keep records showing compliance with these requirements. We will consult in the future on disclosures, refer to Section 3.1.2, and the information about backing assets and the stablecoin pool an issuer must publish. We will require issuers to appoint third parties authorised in the UK to hold money and assets in asset pools. The issuer will remain legally responsible for safeguarding the assets as trustee. Issuers will be required to hold money and assets with a third party. Our rules will require money other than central bank deposits to be held with a commercial bank authorised by the PRA, and assets to be held by a custodian that is authorised in the UK to carry out custodian activities (and thus subject to the FCA’s client asset regime), that holds the assets in the UK. Several respondents provided feedback about issuers appointing third parties within the same group as the issuer. They argued that such a requirement would be inconsistent with third party arrangements in other areas of financial services, which allow third parties in the same group. Further, they pointed out that authorised custodians already have robust conflict of interest and risk management procedures and, in some cases, more established and higher quality custodian services than that of an unconnected custodian. We will maintain the policy set out in our 2025 consultation, which does not prohibit issuers appointing third parties within their group. This reflects the currently limited availability of unconnected custodians for systemic stablecoin issuers and the potential for unintended concentration risks were issuers to rely on a small number of providers. As we gain greater visibility on the availability of unconnected third parties, we will consider whether this policy should be revisited. Opens

We will also require issuers to exercise due skill, care and diligence when appointing and reviewing third parties, including by considering a range of relevant factors and the need for appropriate diversification. An issuer must also periodically review its custody arrangements, including whether it is appropriate to diversify the third parties it uses. Issuers will be required to obtain written agreement from a third party that it has no recourse to the money and assets in the trust. Our rules will require an issuer to sign acknowledgement letters with third parties (other than the Bank). An issuer will not be able to hold money or assets with a third party without a signed acknowledgement letter. The third party will acknowledge in the letter that money or assets in an asset pool are held on trust by the issuer; the third party will also agree that it has no recourse or right to the money or assets held to satisfy any of the issuer’s obligations. We also indicated in our 2025 consultation that we would consult further on details of the failure regime. We have included more details on our proposals for the failure regime in
Section 2.2.7.
2.2.3: Issuance, legal claim and redemption
Proposed approach in the 2025 consultation paper Coinholders should have a robust legal claim for the value of their stablecoins against the issuer and issuers must honour redemption requests on demand at the face value of the stablecoins without undue constraint or cost. In accordance with international standards (ie PFMIs), redemption requests should be processed by the end of the day on which a valid redemption request is made, and in real time wherever possible. Issuers would remain accountable for compliance with the Bank’s requirements where they decided to outsource redemptions. Issuers will need to manage the risks of using intermediaries and demonstrate to us that risks are sufficiently mitigated and all coinholders can redeem in normal and stress times. Finally, to minimise frictions in the redemption process due to excessive fees, issuers would be expected to provide redemptions free of charge where possible. Otherwise, any fees charged should be fair, transparent, and proportionate to the costs incurred. Opens

Consultation feedback
Most respondents to our 2025 consultation expressed support for the proposed redemption requirements. Those in support expressed that strong, timely redemption and robust legal claims are foundational to a credible systemic stablecoin regime. Those that expressed disagreement noted that same day redemption could undermine Anti Money Laundering (AML)/Know Your Customer (KYC) controls as issuers would face pressure to rush checks. They also noted that a broad same day redemption requirement would be operationally challenging and risked overlooking traditional payment system cut-off times as well as the 24/7 nature of stablecoin markets. Respondents also noted it would be beneficial to provide clarity on the redemption process and timing, considering the different elements within the redemption process including AML/KYC checks and redemption request timeframes. Some respondents expressed concerns regarding redemption as an operational resilience risk. The FSRC report called on the Bank to consider the role and impact of a direct redemption requirement and the operational viability of completing AML/KYC checks within the proposed redemption deadlines. The Bank’s response and updated policy approach Overall, we will maintain the legal claim requirement set out in the 2025 consultation that issuers have an obligation to ensure coinholders are able to redeem their stablecoins for the face value of their stablecoins in money denominated in sterling, unless the holder requests redemption in a different currency. This means that coinholders must be able to redeem at any time directly with the issuer, if they wished to do so. We are providing clarity on the different elements of the redemption process, including the timeframe to complete redemption requests. We also are restating our policy position on requirements around issuance of stablecoins. On redemption timeframes, we maintain our expectation that issuers should be able to complete requests in real time or, at latest, by the end of the business day. However, acknowledging payment system interaction and operational challenges, we propose to Opens

require redemption requests to be processed as soon as practicable, and in any event, within 24 hours of receipt of a full redemption request. This is closer to the FCA’s redemption timeframe proposed in their May 2025 consultation (CP25/14). We will maintain our requirement that coinholders should be able to redeem their coins for money (excluding e-money) at any time at face value without undue constraint or cost. As such, redemptions should be free of charge where possible and holders should not be subject to minimum redemption quantities or conditions that could be onerous or difficult for them to meet. Issuers may only deduct fees from the face value paid on redemption with the coinholder’s consent. Likewise, the Bank acknowledges there are different business models to effectively process redemptions. The Bank will not prevent or restrict any model. However, issuers will remain responsible for ensuring redemptions can be processed at all times. We will not permit the suspension of redemptions for any reason. The requirement to honour redemption requests in line with the Bank’s timeframes requirement applies at all times, including during periods where issuers are experiencing operational disruption. The rules reflecting these policy positions can be found in Part 5: Issuance, Legal Claim and Redemption (Annex E of Code of Practice). Under the Bank’s requirements, issuance of systemic stablecoins must be done in exchange for money. When a systemic issuer receives money for the purchase of a systemic stablecoin, it must send the coins to the person’s nominated blockchain address immediately. Coinholders’ right to redemption for money is fundamental to ensuring that a systemic stablecoin can function credibly as money and maintain confidence in its value and convertibility. It is also important to support the safe coexistence and smooth transfer between different forms of money in a multi-money ecosystem and is consistent with relevant international standards for systemically important stablecoin arrangements . Issuance in exchange for money and immediate transfer to the holder’s nominated blockchain address. Opens Opens

Redemption requirements are fundamental to whether a systemic stablecoin can credibly function as money. For a stablecoin to maintain a stable value and be used for payments, coinholders must have a clear and enforceable right to redeem against the issuer at face value in fiat currency. We have therefore included a requirement on the issuer to ensure that the contract between the issuer and holder of a systemic stablecoin include a right for the holder to redemption in accordance with the provisions of the Issuance, Legal Claim and Redemption Part. In the absence of a robust obligation on issuers to redeem, confidence in the value and convertibility of systemic stablecoins could be undermined. Timely and reliable redemption is the practical mechanism through which coinholders’ rights are given effect. Prompt redemption therefore supports confidence that systemic stablecoins can be converted smoothly into other forms of money and used safely in payments and settlement. It is not only a consumer-facing feature of the regime, but a core prudential safeguard supporting the stability of systemic stablecoins as money. Coinholders’ right to redemption is also important in the context of the Bank’s broader policy framework on innovation in money and payments. In the 2025 consultation, we emphasised that trust in money must be maintained as innovation in payments evolves, and that new forms of money should operate safely alongside existing forms of money in a multi-money mixed ecosystem. Against that background, clear obligations to redeem support interoperability and the smooth movement between different forms of money at par, both now and in the future, both in retail and wholesale environments. Stablecoin issuers will need to ensure they can remain interoperable with evolving payments infrastructure to deliver this. Having considered feedback to our 2025 consultation, including FSRC concerns; and based on the above, we will maintain our proposal that issuers will have a direct obligation to ensure coinholders’ right to redemption of their stablecoins for the value, irrespective of the redemption model used. In our view, this is important to support confidence that stablecoins can be redeemed at face value, at any time and converted smoothly into other forms of money. It also reduces the risk that coinholders would need to rely on secondary market sales in order to access funds, which could undermine par value in stress. Redemption will need to be in money (excluding electronic money) and, unless the holder requests redemption in a different currency, denominated in sterling. This is in line with both FSB recommendations for global stablecoin arrangements and the CPMI-IOSCO Guidance on Application of the PFMIs to stablecoin arrangements , which require a robust legal claim on the issuer and/or recourse to the underlying reserve assets. In practice, this means issuers must always enable coinholders to redeem their coins directly, should they wish to do
so. Likewise, the issuer should have the capacity to meet Issuers must ensure that coinholders can redeem their coins at any time. Opens

redemption requests directly from the holder. This is critical for meeting the FPC’s second expectation that systemic payment stablecoins should meet equivalent standards to commercial bank money. In our 2025 consultation we proposed that on receipt of a valid redemption request, an issuer must ensure this is completed at face value by the end of day on which a valid request is made. We noted that timely convertibility of stablecoins into other forms of money including commercial bank money is crucial to support confidence in stablecoins, and for ensuring the UK has an interoperable multi-money ecosystem. While we expect most transactions by holders to be with wallets at par, coinholders’ inability to redeem promptly directly with issuers could cause them to ‘sell’ their coins on secondary markets, increasing the risk of stablecoins departing from par. Furthermore, timely redemption serves as an effective operational mechanism for generating liquidity. Given the necessity to transition seamlessly between various forms of money to facilitate liquidity and settle obligations efficiently, redemption is essential to enable the transfer of liquidity across different monetary instruments. This is especially important in wholesale environments. In response to our 2025 consultation, most respondents expressed support for the proposed redemption policy. However, some respondents disagreed noting that a broad same day redemption would be operationally challenging and risked overlooking traditional payment system cut-off times and their interaction with the 24/7/365 nature of stablecoin markets. Similarly, the FSRC report called on the Bank to consider the operational viability of completing AML/KYC checks within the proposed redemption timings. Furthermore, some respondents also noted it would be beneficial to provide clarity on the redemption process and timing. Acknowledging the operational complexity of interacting payment systems, traditional payment systems cut off times and the operational processing of redemption requests; we require systemic issuers to process redemption requests as soon as practicable but no later than within 24 hours of receipt of a full redemption request. This in practice means a change into how end of day is defined. Because stablecoin payment systems are meant to operate on a 24/7/365 basis, we think that the processing of the redemption requests should also be in line with such timings. As such, issuers will have 24 hours to complete a full redemption request. Systemic issuers will need to process redemption requests as soon as practicable but no later than within 24 hours of receipt of a full redemption request. Opens Opens

In our 2025 consultation a valid redemption request was defined as one where the requesting party has provided the required documentation to allow the issuer to undertake AML/KYC checks. This meant that a redemption request was dependent on the issuer receiving such documentation and being able to process the request within the established timeframe. Respondents to our consultation noted that our proposed approach could undermine AML/ KYC controls as issuers would face pressure to rush checks. While we would expect issuers or third parties to execute and complete AML/KYC checks, ideally at onboarding to facilitate any eventual redemption requests, we acknowledge that these checks in specific circumstances may take longer than expected. To accommodate our timeframe policy, we have decided that the timeframe for completing redemption requests should begin only after AML/KYC checks have been completed, and to refer to this point as receipt of a ‘full redemption request’. As such, a redemption request will become a ‘full redemption request’ when issuers receive:
(i) the redemption request; (ii) have completed AML/KYC checks in line with appropriate requirements; and (iii) are in receipt of the coins in their wallet from the coinholder making the request. We think this approach ensures that systemic issuers or third parties acting on their behalf complete checks in a time that is reasonable and do not rush AML/KYC checks to meet the Bank’s requirements. We acknowledge that AML/KYC checks can be completed at different stages. For example, at the onboarding or when coinholders make a redemption request. Ideally, we would expect systemic issuers and third parties to do AML/KYC checks at onboarding and upon account set-up. This approach would facilitate compliance with our requirement and efficient processing of a redemption request. Under the draft code of practice, and consistent with the FCA’s proposal under their May 2025 consultation (CP25/14), the redemption process is completed when the issuer or a third party acting on its behalf has instructed a valid payment order to transfer funds to the coinholder’s account. This ensures that the issuer is not responsible for delays arising within payment or banking systems, including in the case of international transfers. However, issuers must ensure that sufficient liquidity is prepositioned for a payment order to be valid, thereby avoiding the risk of payment orders being rejected. We are clarifying when a redemption request becomes full and complete, while establishing that issuers must process requests in sequence and maintain appropriate backing, reconciliation, and record-keeping arrangements throughout the redemption process. Opens

Valid redemption requests must be completed in an order that is fair and objective. In feedback to our 2025 consultation, some respondents suggested that redemption models could differentiate between types of coinholder. We do not consider that prioritising between types of holder would meet the FPC expectations . Instead, the order of processing full redemption requests should be based on a fair and objective criteria and on a rolling, first come first served basis to avoid such prioritisation. As part of the redemption process, we will require systemic issuers to meet the Bank’s recording, backing and reconciliation requirements for redeemed coins. When a coin is redeemed, the issuer will need to continue to include it in the relevant stablecoin pool with required backing assets or burn the coin. If the issuer decides not to burn the redeemed coin, at the point of reconciliation, it must record the redeemed coin as part of the relevant stablecoin pool, and the coin must be backed in line with the Bank’s reconciliation and backing assets requirements. This will also apply when coinholders choose to sell coins to third parties (eg, exchanges). As we stated in our 2025 consultation, there could be different ways in which redemptions are fulfilled. These could either be fulfilled directly with the issuer or with third-parties or intermediaries. Alternatively, coinholders and third parties may choose to convert or exchange stablecoins for fiat in secondary markets, without requesting a redemption. The Bank recognises that systemic issuers will have contractual relationships with third parties to ensure they can act as broker-dealers and perform this buy and sell function. In line with our requirements, the ultimate obligation to redeem the coin will remain with the systemic issuer. As set out in our 2025 consultation, we do not propose to restrict the choice of redemption model. However, issuers must demonstrate how they will mitigate the risks associated with their chosen model to ensure coinholders can redeem in both normal and stressed conditions in line with our requirements. As part of the Bank’s systemic framework, issuers will be required to comply with the requirements set out in the Recognised Payment System Code of Practice, including those relating to operational resilience, third-party risk management, and recovery planning. As set out in Section 3.3 we intend to update that Code of Practice in 2027 to reflect its application to systemic stablecoin issuers. The Bank will not restrict redemption models, but issuers must show they can manage the associated risks so coinholders can redeem in both normal and stress conditions. Redemptions should be free of charge where possible. Any redemption fees must be fair, transparent and proportionate, and should not negatively impact the coin’s face value at the point of redemption or discourage conversion into other forms of money. Opens Opens

We will maintain our proposal from the 2025 consultation. This means that issuers should provide redemptions free of charge where possible. If redemption fees are charged, these must be proportionate and commensurate to the costs incurred. As we stated in the consultation, fees should not be used as a mechanism to disincentivise the redemption of coins, and issuers must not use fees to pass on any costs or losses arising from the sale of assets in the backing asset pool as part of meeting redemptions. Additionally, to protect coinholders’ ability to redeem their stablecoins at par into other forms of money, issuers must ensure that any fees do not reduce the face value of the coin at the point of redemption. Accordingly, redemption fees must not be deducted from the redemption payment without the express agreement of the holder making the request. In practice issuers will need to clearly disclose their redemption arrangements to coinholders, including any applicable fees. This approach supports a resilient payments ecosystem in which households and businesses can move easily between different forms of money, as redemption fees should not create barriers to interoperability between systemic stablecoins and other forms of money. In our 2023 discussion paper we noted that disruptions to redemptions could be due to failure of any participant in the stablecoin payment system or payment chain and, in the case of failure, an issuer. We also noted that in these instances issuers will be required to maintain a recovery and administration plan and that issuers and other relevant entities would be expected to comply with insolvency proceedings and cooperate with insolvency administrators or officials. We also stated that the Bank would reserve the right to require, or allow for, a temporary pause on redemption for financial stability reasons, for example, through a direction to the systemic stablecoin issuer. We did not elaborate on our position on suspension of redemptions in the 2025 consultation. Since then, we have developed our thinking on suspension of redemptions. The Bank will not allow issuers to suspend redemptions for any reason. In practice, this means that the requirement to honour redemption requests in line with our timeframe requirement will be always on, including in periods where issuers or third parties are experiencing operational disruptions. As per our approach to supervising existing FMIs, we recognise that operational disruptions may lead to disruption of redemptions. Should this happen, issuers and/or third parties would be expected to recover operations quickly and safely, in line with their policies, to return to meeting our redemption requirements. Consistent with the role of systemic stablecoins as money, the Bank will not permit systemic stablecoin issuers to suspend redemptions. Continuous redeemability must be maintained at all times, including under stress. Opens

We consider this to be appropriate, given that the Bank’s framework is designed for systemic stablecoins used as money, where continuous redeemability is fundamental. It also aligns with the Bank’s broader approach to prudentially regulated banks and systemically important payment systems where there is no discretionary right for firms to suspend payments or deposit withdrawals as a stress management tool. This approach reflects the design of the systemic framework, under which issuers are expected to maintain sufficient liquidity, robust operational capacity, and credible contingency arrangements to meet redemption requests, including under stress. The Bank in its capacity as supervisor, preserves its ability to require a systemic stablecoin issuer to suspend redemptions where appropriate, including through the use of its powers of direction. Requiring an issuer to suspend redemptions may remain an important supervisory tool in limited circumstances. 2.2.4: Remuneration and rewards for coinholders Proposed approach in the 2025 consultation paper Maintained our policy, set out in 2023 discussion paper, that systemic stablecoin issuers should not pay interest to coinholders. We noted that some issuers offer rewards to customers for using their stablecoins. We intended to consider the implication of this in the context of the remuneration policy and more broadly in the future. Consultation feedback The majority of respondents supported the proposal that systemic stablecoin issuers should not pay interest to coinholders. These respondents considered that the proposal would help reinforce the principle that systemic stablecoins should primarily be used for payments and not as a means of investment or store of value. They also noted that such an approach could support the Bank’s broader objective to protect and enhance the stability of the financial system of the UK. Some raised concerns that a broad prohibition on remuneration could reduce the commercial viability of certain business models. These respondents also highlighted the importance of ensuring that the UK regime remains proportionate, supports innovation and takes account of developments in other jurisdictions. Opens

Respondents emphasised the importance of distinguishing between a prohibition on interest paid directly to coinholders from other forms of incentives, such as paymentlinked rewards or loyalty schemes. The Bank’s response and updated policy approach We will maintain our policy that systemic stablecoin issuers should not pay interest to coinholders. In line with feedback from respondents, we have provided greater clarity on the distinction between prohibiting interest on stablecoin holdings and permitting other forms of incentives, such as activity-based rewards that are consistent with the use of a stablecoin as a means of payment. Prohibited remuneration:
We intend to prohibit the payment of interest and income paid by the issuer to the coinholder in connection with the holding or retention of a stablecoin. This includes any returns provided in cash, tokens, fee rebates or other forms of consideration that are calculated by reference to the period for which the stablecoin is held. Permitted remuneration:
We clarify that our policy is not directed at benefits, incentives, rebates, discounts and other activity-based rewards that are consistent with the use of a stablecoin as a means of payment, such as rewards conditional on using a stablecoin to make or facilitate a payment. However, permitted rewards must not arise from holding or retaining a stablecoin, including by reference to the period for which the stablecoin is held. The rules reflecting these policy positions can be found in Part 6: Remuneration. (Annex F of Code of Practice). Respondents to the 2025 consultation broadly agreed with our proposal that coinholders should not be remunerated, however emphasised the importance of providing greater clarity on the distinction between prohibited remuneration and permissible incentives. In particular, feedback highlighted the need to clearly differentiate interest or returns linked to the holding or retention of stablecoins from activity-based rewards, such as those linked to payments or transaction activity. Opens

While this reflected concerns about how a broad prohibition could operate in practice and the viability of business models, it also underscored the importance of ensuring that the UK regime is clear, predictable and supports appropriate incentives for issuers to establish and scale their activities in the UK. In response, within this publication we have sought to articulate this distinction more explicitly, both to provide certainty on the scope of the prohibition on interest-related remuneration and to support a framework in which firms can issue and operate in the UK with confidence. A core objective of our framework for systemic sterling‑denominated stablecoins is to support a payments-focused use case. In that context, we do not consider it appropriate for issuers to pay interest or benefits to coinholders in connection with holding or retaining the stablecoin. Allowing issuer‑paid interest could blur the distinction between stablecoins used as money for payments and investments used primarily to generate return. Maintaining a clear boundary in this area supports our wider objective that systemic stablecoins should function as money and be used primarily for payments. We intend to clarify that the prohibition is intended to apply to interest paid to coinholders irrespective of the source of funding. Accordingly, it is not limited to returns funded from the issuer’s backing asset pool but also extends to returns financed from other revenue streams of the stablecoin issuer. Having considered the financial stability implications of permitting activity-based rewards and other benefits or incentives consistent with the use of a stablecoin as a means of payment, we do not, at this stage, view a prohibition on this form of remuneration to be proportionate. We expect allowing this form of remuneration may also help support the viability of issuer business models and to strengthen the overall competitiveness and attractiveness of the systemic part of the UK regime. We therefore intend to permit issuers to offer incentives to coinholders where these are linked to the following activities:

the use of a stablecoin to make, receive, process or settle a payment, transfer or
remittance, including similar payment activity. This may include, for example, rebates or discounts linked to the purchase of goods or services using a stablecoin, or merchant, platform and acceptance-related incentives connected to the use of a stablecoin as a means of payment;
participation in loyalty, promotional, subscription or customer incentive programmes where
the benefit is earned by reference to payment activity;
the use of a wallet, account, application, platform or other interface to initiate, receive or
manage stablecoin payments; and
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Rewards linked to the activities listed above are permitted, provided they do not arise from holding or retaining a stablecoin. In particular, they must not be calculated by reference to the length of time a stablecoin is held. We recognise that an issuer might be able to circumvent the prohibition by paying interest to coinholders through third‑party arrangements. Where an issuer has entered into or enabled an arrangement under which a third party makes payments to coinholders calculated solely by reference to the length of time a stablecoin is held with that third party, and those payments are contingent on profits received from the issuer, we are likely to regard that arrangement as falling within the scope of our prohibition on issuer‑paid interest. Payments made by the issuer to service providers or intermediaries as part of a commercial or service level agreement would not be considered as a circumvention of the policy intention and would not be prohibited. We will continue to work closely with the FCA to monitor the benefits, risks and financial stability implications of indirect remuneration arrangements, and to consider the appropriate regulatory treatment over time. We will also continue to monitor developments in other jurisdictions. Our policy position intends to balance support for innovation with the need to mitigate risks to financial stability. It is also broadly consistent with the approach for non‑systemic stablecoins by the FCA and with the wider international direction of travel. 2.2.5: Payment system access Proposed approach in the 2025 consultation paper Systemic stablecoin issuers should directly access payment systems, rather than through a sponsoring participant. Direct access would support frictionless redemptions, as well as interoperability across different forms of money. Consultation feedback

participation in operational or service-related arrangements that support payments.
We will continue working with the FCA to monitor the benefits and risks of permitting or prohibiting rewards through indirect remuneration arrangements. Opens

The majority of respondents expressed support for the Bank’s proposal. Those against it noted that indirect or tiered access through sponsoring participants or a clearing framework is adequate to ensure liquidity for redemptions. They also suggested that direct access should be an option rather than a strict requirement. The Bank’s response and updated policy approach:
We will maintain our expectation that systemic stablecoins should directly access payment systems to support frictionless redemptions. We expect that direct access to payment systems will reduce tiering and counterparty risks, brings down concentration risks, and limits single points of failure. It should also support interoperability to enable different forms of money to be easily interchanged with each other, and therefore support trust and confidence in money. Payment system access is key to enabling interoperability and smooth movement between different forms of money. As innovation in money and payments evolves, new forms of money should be capable of interacting and operating safely with other forms of money. This is especially important as we aim to develop a multi-money ecosystem. In our 2025 consultation, we proposed the expectation that systemic stablecoin issuers should have direct access to payment systems. We noted that direct access would support interoperability across different forms of money. It would enable frictionless redemptions, and settlement flows by reducing reliance on sponsoring participants and shortening settlement chains. It would mitigate financial stability risks by reducing tiering, counterparty and concentration risks, as well as limiting single points of failure in payment and redemption chains. Most respondents to our 2025 consultation agreed with the Bank’s proposed expectation that systemic issuers should have direct access to payment systems. Some respondents stated that indirect or tiered access through sponsoring participants or a clearing framework is adequate to ensure liquidity for redemptions. They also noted that the decision for direct access should be an option rather than a strict requirement. Payment system access supports interoperability, frictionless redemptions and financial stability in a multi-money ecosystem. We will maintain the expectation that systemic stablecoin issuers should have direct access to payment systems. Opens

We believe direct access better supports interoperability across different forms of money. As outlined in the 2025 consultation, direct access would enable operations such as on or offramping and payments from commercial bank accounts into stablecoin accounts (and vice versa) to be conducted frictionlessly and settled in central bank money. We expect that direct access by stablecoin issuers to payment systems will best support financial stability and trust in money because it reduces reliance on sponsoring participants, shortens settlement chains, and gives systemic issuers greater control over the timeliness and certainty of redemption and settlement flows. Direct payment system access should also support resilience, competition and innovation by enabling systemic issuers to interoperate with other forms of money on a more consistent footing, rather than depending on commercial arrangements that may introduce concentration, dependency or friction. Furthermore, we think direct access to payment systems supports on‑demand redemption by enabling systemic stablecoin issuers to initiate and settle redemption flows directly in central bank money, thereby enhancing the timeliness and certainty of payments while reducing reliance on sponsoring participants. By shortening settlement chains and removing tiering‑related dependencies, direct access mitigates operational, counterparty and concentration risks, and supports more assured and immediate access to settlement liquidity in both normal and stress conditions. Nonetheless, the Bank acknowledges that gaining direct access to payment systems depends on each type of payment system, as each scheme has its own process for potential direct participants to effectively gain direct access. We recognise that obtaining direct access may take time for an issuer, as many payment systems will require access assessments, with decisions made independently by the payment system operator in line with its rules. The Bank will monitor progress and operational feasibility of systemic issuers gaining direct access. Further details on transitional arrangements will be set out in the ‘Approach to Joint Regulation’ document, which the Bank and FCA intend to publish shortly. The Bank will work with firms on a case‑by‑case basis to manage any transition from indirect to direct access in a proportionate manner that supports viable business models. As set out previously, the Bank is working with industry to consult on the design and features of next-generation retail payments infrastructure. A key objective is to support greater interoperability between different forms of money, including stablecoins. In future, stablecoin issuers will need to engage with the Bank and the wider industry to support an orderly transition to this next-generation infrastructure. Opens

2.2.6: Step-up approach for ‘systemic at launch’ issuers Proposed approach in the 2025 consultation paper Stablecoin issuers recognised by HMT as systemic at launch, those that are considered as systemically important from the outset of their operations, could be allowed to hold up to 95% of their backing assets in sterling-denominated UK government debt securities as they scale, with the remaining 5% being held in unremunerated central bank deposits. The percentage would be reduced to 60% once the stablecoin reaches a scale where this is appropriate to mitigate the risks posed by the stablecoin’s systemic importance without impeding the firm’s viability. We would expect stablecoin issuers transitioning from the FCA’s non-systemic requirements to follow a similar path over an appropriate time horizon to ensure that transition is orderly. Consultation feedback There was broad support for a phased, step‑up approach, with calls for a clearer criteria and timing for transition. There were also calls for FCA–Bank coordination to avoid regulatory ‘cliff edges’ and a smooth process for shifting into the systemic part of the stablecoin regime. Many respondents called for expanding permissible backing assets beyond government debt securities for firms under the step-up approach. The Bank’s response and updated policy approach Adjustment to reflect the updated proposal on backing assets calibration of 30% in unremunerated central bank deposit and 70% in short-term UK government debt securities with up to six months maturity. An expanded set of permissible backing assets will not be permitted under the step-up approach, given the additional financial risks they would introduce. We will seek to apply proportionate capital and reserve requirements to systemic at launch firms, considering their risk profile and circumstances. Firms holding a higher share of UK government debt securities will be required to hold correspondingly higher Opens

financial risk reserves. However, where risks are lower, we may use our powers of direction under section 191 of the Banking Act 2009 to apply other components of our capital and reserve requirements proportionately on a case-by-case basis. This approach supports innovation while maintaining appropriate risk mitigants. The step-up approach and the transition for non-systemic firms to being jointly regulated by the Bank and FCA are separate, and guidance will be different for each. Further detail on how the Bank and FCA will be jointly regulating firms and how transition between the two parts of the regime will be managed in the ‘Approach to Joint Regulation’ document, which the Bank and FCA intend to publish shortly. As set out in the November 2025 CP, in line with our risk-based, proportionate approach to regulation, we will have a ‘step-up’ approach for stablecoins recognised as systemic at launch. Under the ‘step-up’ approach, stablecoin issuers recognised by HMT as systemic at launch (that is those that are considered as systemically important from the outset of their operations) will be allowed to hold up to 95% of their backing assets in sterling-denominated UK government debt securities as they scale, with the remaining proportion of backing assets being held in unremunerated central bank deposits. The percentage held in sterlingdenominated UK government debt securities will be gradually reduced to 70% (in line with the revised backing assets proposal) once the stablecoin reaches a scale where this is appropriate to mitigate the risks posed by the stablecoin’s systemic importance without impeding the firm’s viability. The ‘step-up’ approach will help to support viable business models as firms scale while mitigating against financial stability risks. When and how an issuer is required to reduce the percentage of sterling-denominated UK government debt securities to 70% will be determined on a case-by-case basis as firms scale. We will apply our capital and reserve requirements to a firm that is recognised as systemic at launch in a proportionate way, taking into account the firm’s individual circumstances. While we will apply some components of the capital and reserve requirements on a proportionate basis, these firms will need to hold proportionately higher reserves for financial risk given the higher proportion of UK government debt securities they will hold. For new firms, the Bank would expect to apply the principles and approach set out in the Bank's supervisory approach to onboarding new financial market infrastructure firms, including the timeframes set out for each phase of the onboarding process. Firms will need to Opens

be authorised by the FCA before being able to move through the different stages of the Bank’s onboarding process. Firms would also need to meet the requirement of holding 5% of the backing assets as unremunerated central bank deposits before starting live issuance. The Bank is also working with the FCA to manage the transition for issuers that grow to be systemic, including the arrangement for how they would meet our requirements on backing assets without impeding the issuer’s viability. Transition between FCA and Bank’s requirements The step-up approach and transition for non-systemic firms to the systemic part of the regime are separate and guidance will be different for each. However, both will follow a risk-based and proportionate approach, tailoring the Bank’s requirements to the individual arrangement and the different risks it poses, with general expectations that are applicable to all transitioning and systemic at launch firms, respectively. Detail on how the Bank and FCA will be jointly regulating firms and how we plan to manage the transition between the two sets of rules will be provided in the ‘Approach to Joint Regulation of Systemic Stablecoin Issuers’ document, which the Bank and the FCA intend to publish shortly. Firms moving from the FCA requirements for non-systemic stablecoin issuers to meeting the requirements for systemic issuers might need a transition period to gain orderly access a settlement account at the Bank, transition its backing assets, meet the capital and safeguarding requirements, as well as the full Bank Code of Practice for systemic stablecoin issuers without posing financial stability risks and supporting firms’ business viability. We would expect the transition period to take between 12–36 months. This might be shorter or longer depending on the firms’ specific circumstances. 2.2.7: Failure arrangements The proposed going concern regime provides strong safeguards, but it cannot eliminate tail risks. These risks include fraud, operational or technology failures and mismanagement that, in extreme adverse scenarios, may result in the failure of a systemic stablecoin issuer. In such circumstances, the Bank could apply to the court to have the systemic stablecoin issuer placed into a special administration regime designed for financial market infrastructure (known as the FMI SAR). The court would nominate an insolvency practitioner to stabilise the systemic stablecoin issuer, subject to directions from the Bank and from the court, with a view to effecting its recovery as a viable going concern, sale to a purchaser, or an orderly wind down. Opens

Subsequent to legislation to provide the Bank with powers necessary to require issuers to hold backing assets and relevant reserves on statutory trust and to maintain robust safeguarding practices as proposed in the 2025 consultation, we expect to consult on the detail of these requirements relating to the failure of a systemic stablecoin issuer. As part of that, we will consider whether additional requirements are needed to support operational and contractual continuity of the services of a systemic stablecoin issuer when in the FMI SAR. These arrangements are intended to ensure that coinholders’ claims are protected from losses experienced by the systemic stablecoin issuer. Unlike for deposits covered by the Financial Services Compensation Scheme (FSCS), coinholders’ claims will not be insured. As a result, if, despite these safeguarding arrangements, there are insufficient backing assets and reserves, coinholders – like uninsured bank depositors – would be exposed to losses and may receive less than 100 pence in the pound. As stablecoin business models develop and the scale of the sector grows, we may revisit these arrangements working closely with HMT and the FCA. 2.2.8: Systemic importance The Bank’s framework applies to systemic stablecoins and to other entities within a systemic stablecoin payment chain where recognised by HMT. In line with the statutory framework, HMT determines whether a payment system or service provider is systemic and is required to consult the Bank and relevant regulators. When consulted by HMT, the Bank considers factors including those set out in the recognition criteria in the Banking Act 2009. As set out in the November 2025 consultation paper, the Bank’s approach is grounded in these statutory criteria and is undertaken on a holistic, case-by-case basis. The Bank would consider a range of indicators, including the scale, nature of use, substitutability, interconnectedness, as well as use by the Bank in the course of its role as a monetary authority. The assessment of whether a stablecoin payment system or service provider is systemic requires the exercise of judgement, reflecting the forward-looking nature of the framework. This approach is designed to accommodate new and evolving use cases. As set out in the 2025 consultation, the same level of activity may have materially different implications for financial stability depending on how a stablecoin is used (for example, for crypto-asset trading versus everyday payments). A case-by-case assessment supports a proportionate and riskbased approach as the market develops. At the same time, we recognise the importance of clarity and predictability for firms. The Bank has provided guidance on the factors and indicators it will consider when consulted by HMT (information about the process for HMT’s Opens

recognition of payment systems and digital settlement asset service providers, is available at Authorisations), and will continue to engage with industry and HMT as the regime is implemented. The coordinated design and interaction of the Bank and FCA parts of the UK stablecoin regime, and the approach to transition between them is set out in the forthcoming ‘Approach to Joint Regulation’ document to help manage the transition. As the differences between the regimes are narrowed and the transition framework is clarified, firms are less likely to face abrupt changes in regulatory treatment at the point of recognition. This supports a more graduated and predictable regulatory perimeter, consistent with the Bank’s objective of safeguarding financial stability while supporting innovation. 2.3: Policy unchanged 2.3.1: Non-sterling stablecoins This section considers potential systemic use in the UK of non-sterling-denominated stablecoins issued from outside of the UK. The Bank considers that, for these stablecoins, deference to the home authority’s regulatory and supervisory framework is the most suitable means of ensuring UK financial stability (please refer to our approach to multi-issuance below). Consistent with our statutory objectives, we could only defer to the home authority if their framework delivers similar outcomes to the Bank requirements for systemic stablecoins, and we are satisfied that there are sufficient co-operation arrangements in place between the Bank and the home authority. The decision to defer will be subject to a comprehensive assessment of a home authority’s regulation and supervision. The Bank’s assessment of regulatory outcomes will consider all relevant areas of regulation, including legal claim and redemption rights, redemption timelines, safeguarding provisions, custody rights, backing assets, capital requirements, remuneration, and management of failure and insolvency. The Bank will be particularly focused on the home authority’s framework and requirements for:

coinholders to have a robust legal claim for the value of their stablecoins against the issuer
and issuers to honour redemption requests on demand at the face value of the stablecoins without undue constraint or cost. This includes robust rights for coinholders, including in insolvency, and ensuring that the failure regime does not unfairly prioritise particular coinholders;
redemptions to take place in a timely manner; and
stablecoins to be fully backed at all times with highly liquid assets. In assessing whether
similar outcomes are achieved where the range of eligible backing assets differs from the Bank requirements, the Bank will have regards to potential mitigants to address any Opens

We have observed the emergence of models where multiple legal entities subject to different regulatory requirements issue stablecoins that are meant to be fully fungible across borders – referred to as ‘multi-issuance’. We do not think that these models are suitable for systemic use in the UK, given the current practical and technological barriers to ensuring the adequate balancing of locally held reserve assets with global coins potentially crossing borders instantly and at scale. This could result in insufficient reserves where redemption requests occur. In times of stress or failure, issuers of such stablecoins could face fragmentation of their liquid backing assets and not be able to move reserves fast enough to cover redemption demands. Differences in regulatory and legal protections attached to different entities could also mean that all coinholders are not protected equally. This could have implications for the ability of coinholders to redeem at par and, ultimately, lead to run dynamics that undermine trust and confidence in the stablecoin and, therefore, financial stability. Consistent with our deference-first approach, our preference is for single-issuance models backed by a single reserve, subject to robust regulatory requirements, where there are sufficient arrangements in place between the Bank and the home authority to ensure effective co-operation (including in stress). The Bank will continue to engage with other authorities and industry on this topic as regimes and operating models develop. 2.3.2: Location requirements Our proposals for location requirements remain unchanged since the 2025 consultation. We invited feedback on broader aspects of the proposed policy, including areas unchanged from the 2023 discussion paper, but did not receive any material feedback on location requirements. The Bank remains focused on safeguarding financial stability in the UK. For sterlingdenominated systemic stablecoins, we consider that the best way to mitigate risks to UK financial stability is to apply the Bank’s systemic stablecoin requirements directly by requiring subsidiarisation. This means non-UK based, sterling-denominated systemic stablecoin issuers should set up in the UK as subsidiaries to carry out business and issuance activities in the UK and with UK-based consumers, both directly and through intermediaries. additional risks posed by the specific set of backing assets permissible under the home authority's regulatory framework. For example, the Bank will consider whether backing assets can be liquidated and monetised in a timely manner if faced with large redemption requests and if there are appropriate risk management requirements in place that account for the wider range of backing assets permissible. Opens

The Banking Act 2009 provides the Bank with the ability using a Power of Direction to require or prohibit the taking of specified action in relation to recognised systemic stablecoin issuers. This includes the ability to apply location requirements. 2.3.3: Ledgers Our position on the use of public permissionless ledgers (PPLs) by systemic stablecoin issuers remains unchanged from the November 2025 CP. We remain open to the use of PPLs by systemic stablecoin issuers provided they can meet our expectations and ensure trust and confidence in money. However we remain of the view that it may be challenging for these ledgers to meet our expectations when it comes to accountability, settlement finality and operational resilience, including cyber security. Respondents broadly agree with the Bank’s characterisation of risks in PPLs but differ on their materiality and how they should be regulated. Some respondents emphasise that these risks remain significant – particularly the lack of clear accountability and uncertainty around settlement finality – supporting the need for strong oversight before PPLs can be used by systemic stablecoin issuers. By contrast, other respondents argue that these risks are already mitigated through existing technological and contractual mechanisms, and therefore call for tech‑neutral, outcomes‑based regulation rather than restrictive or prescriptive approaches. Across respondents, there is consistent recognition that accountability and settlement finality are the most challenging and least mature areas, likely requiring further legal clarity and innovation, whereas operational resilience is seen as more workable using established risk management practices. Beyond the core framework, respondents highlight a wider and evolving set of risks that the Bank should consider. These include financial crime and AML/CFT risks, privacy and data protection concerns and concentration risks within decentralised systems, and operational issues such as scalability, congestion, and interoperability. More forward-looking concerns – particularly quantum computing risks to cryptography and emerging threats such as AIenabled fraud – were also flagged. There is a strong and consistent call for the Bank to engage closely with industry to develop practical solutions. In line with the call for the Bank to engage closely with industry to find practical solutions, the Bank has been engaging in a number of initiatives to explore the risks and suitability of PPLs for various use cases. This includes:

our Wholesale Experimentation Programme is focusing on testing how different tokenised
assets can interoperate across private and public DLT ledgers to enable settlement of complex wholesale transactions. We will publish a summary report of our learnings in Opens

2027;

the Bank has run the DLT Innovation challenge where we worked with industry innovators
on how central bank money could be tokenised on ledgers that the Bank doesn’t control. The report summarising the findings from the DLT Innovation Challenge was published on 12 May 2026;
the DLT Innovation Challenge highlighted that faster, more deterministic settlement often
was traded with reduced decentralisation. Participants also demonstrated that controls over assets can be implemented on these ledgers, although governance arrangements frequently remain reliant on off-chain processes. We consider the treatment of probabilistic finality models, and the governance of public permissionless ledgers, to be areas where further policy development and greater understanding are required; and
the Bank continues to engage with industry on the use of PPLs for securities settlement in
the Digital Securities Sandbox.
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3: Policy Implementation
3.1: New areas to highlight
In addition, there are two further areas that we are finalising as we implement the regime. These are outlined below. 3.1.1: Central Bank Liquidity Facility The Bank set out in the 2025 consultation that it was considering providing access to a backstop lending facility for eligible, solvent, and viable systemic stablecoin issuers, which would allow them to borrow against short-term sterling-denominated UK government debt securities in a limited set of circumstances. Systemic stablecoin issuers are responsible, in the first instance, for managing their own liquidity risks. They should be able to meet redemption requests through using private market mechanisms as a front-stop in the vast majority of circumstances. Nevertheless, the Bank considers that providing a backstop liquidity facility is appropriate to support confidence and trust in systemic stablecoins and thus UK financial stability. The backstop facility would allow systemic stablecoin issuers to monetise their sterlingdenominated UK government debt securities in exceptional scenarios where they might not otherwise be able to do so. Such scenarios could include circumstances where market-based monetisation channels, such as repo or the sale of those securities, are insufficient or unavailable, particularly for operational reasons. This includes lags in market settlement conventions, operational frictions, or severe disruptions that limit the speed or reliability of private market monetisation. By enabling systemic stablecoin issuers to monetise their sterling-denominated UK government debt securities in such scenarios, the Bank will support issuers’ ability to continue meeting coinholder redemption requests. That, in turn, should help issuers to maintain coinholder confidence that their holdings can be redeemed at par, and so support the Bank’s objective of maintaining financial stability and the singleness of money. On this basis, the Bank now intends to introduce a lending facility for systemic stablecoin issuers, providing short-term, collateralised loans of central bank deposits against sterling-denominated UK government debt collateral. The Bank intends to publish further details on the design and operating parameters of the Central Bank Liquidity Facility in 2027, with access for eligible firms to follow shortly thereafter. Subsequent updates will also then be made to the Code of Practice to Opens

accommodate the use of the facility by systemic issuers. The detailed design of the facility, including pricing and any access conditions, will reflect the policy objective of ensuring that the facility is a backstop and not a front-stop, and that it is available for fundamentally solvent and viable systemic stablecoin issuers. 3.1.2: Disclosures The systemic part of the UK regime will enable systemic stablecoin issuers to create a new form of money that coinholders can use with confidence as a means of payment, including through the ability to redeem and exchange stablecoin holdings into other forms of money. An important component of that confidence is the availability to prospective coinholders of information that supports the stablecoin’s value. The FCA has consulted on the disclosure requirements for qualifying stablecoins and UKissued qualifying stablecoins as part of its broader admissions and disclosures, and stablecoin specific framework. These disclosures focus on ensuring coinholders have access to clear, fair and not misleading information across the lifecycle of a stablecoin, from the public offer of the UK-issued qualifying stablecoin to ongoing use. Coinholders will be able access the same information at the point of purchase and on the issuer’s website. All disclosures must be updated when the information becomes inaccurate, while certain core information, such as backing assets, must be updated every three months. The Bank’s rules focus on the prudential aspects of the regime. However, trust and confidence in stablecoins and the mitigation of potential financial stability risks arising from widespread use of stablecoins for payments also depend on coinholders and the market having accurate information. The Bank intends, as a primary measure, to rely on FCA’s proposed disclosure requirements for stablecoin issuers recognised as systemic under the Bank’s part of the regime. However, if and where necessary to address gaps that the Bank determines require additional disclosures, the Bank will apply its own supplementary disclosure requirements to systemic issuers. We will consider the evolution of issuers’ business models before setting any additional requirements, and expect to provide further detail on our approach in future publications. 3.2: Consultation questions for new policy proposals and the draft code of practice Q1: Do you have any feedback on whether the proposed rules in the draft Code of Practice appropriately reflect and give effect to the policy set out in this paper? Opens

Q2: Do you have any comments on how the way the proposed rules give effect to the policy set out in this paper impact financial stability and commercial considerations (including business model viability)? Q3: Do you have any comments on any operational constraints associated with implementing our proposed rules? Q4: Do you have any other comments or feedback on our proposed rules? Q5: Please indicate in your response if you believe any of the proposals in this paper are likely to impact persons who share protected characteristics under the Equality Act 2010 and, if so, please explain which groups and what the impact on such groups might be. 3.3: Upcoming publications and timeline to finalise the regime This publication sets out the Bank’s policy positions for the regulation of systemic stablecoin issuers, reflecting feedback received in response to the proposals set out in the November 2025 consultation paper. It also includes a consultation on the draft Code of Practice (rules) for sterling-denominated systemic stablecoin issuers, which implement the policy positions. Following feedback, we intend to finalise the Code of Practice by the end of 2026, after which the Code of Practice can be applied to recognised systemic stablecoin issuers. Looking ahead, we expect to consult in 2027 on further materials to support the regime, which will consist of:

draft guidance on the Code of Practice;
updates to the Bank’s existing Recognised Payment Systems Code of Practice to reflect
their application to systemic stablecoin issuers;
any further updates deemed necessary to policy and the draft Codes of Practice to reflect
supplementary requirements the Bank may set in future for disclosures, reporting and record-keeping;
consultation on proposed policy and draft Code of Practice on backing asset trust
arrangements and distribution rules, and any provisions necessary, including to support the financial and operational continuity of a systemic stablecoin issuer when in FMI SAR, followed by Policy Statement and final Code of Practice;
a statement of policy on the Bank’s supervisory powers in respect to systemic stablecoin
issuers; and
the application of the Principles for Financial Market Infrastructures to systemic stablecoin
issuers.
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3.3.1: Joint publication with the FCA
In the 2025 consultation, the Bank clarified that together with the FCA we were developing a framework to support innovation and growth, strong consumer protection and maintaining market integrity. This framework would support firms that grow from being solo regulated by the FCA to being recognised as systemic. It would enable a smooth transition to joint regulation by both the FCA and the Bank. Feedback to the consultation asked for further clarity on how this transition would happen and how the FCA’s and the Bank’s rules would interact. In response to this feedback, and in line with our commitment to provide further detail on this topic, the Bank and the FCA intend to publish the Joint Regulatory Approach shortly. This framework will set out how the authorities will work together and coordinate the exercise of their relevant functions, how the recognition process will look, and how the transition to being jointly regulated by both the Bank and FCA will work in practice. We will also provide an overview on how the rules across authorities will interact, and if deemed necessary authorities will follow up with a subsequent joint publication in due course, once both sets of rules have been finalised. The joint publication will also set out how the Bank’s approach to onboarding new FMIs applies to stablecoin issuers that become jointly regulated and are recognised as systemic at launch. We will invite feedback on any remaining challenges that industry may identify. This will support authorities in ensuring a smooth transition to joint regulation, and to support new stablecoin issuers as they scale their business under the step-up approach. Opens

4: Responding to the consultation questions in this publication The consultation period for this publication closes on 22 September 2026. The Bank welcomes responses to any questions but does not expect respondents to provide an answer to every question. We are keen to hear from a wide range of stakeholders, which includes community or charitable-focused organisations, the payments industry, businesses, and the general public. When providing your response, please tell us whether or not you consent to the Bank publishing your name, and/or the name of your organisation, as a respondent to this consultation paper. Please indicate in your response if you believe any of the proposals in this paper are likely to impact persons who share protected characteristics under the Equality Act 2010 and, if so, please explain which groups and what the impact on such groups might be. You can respond to this questionnaire through the web form . You can also respond by email: CP-systemicstablecoin@bankofengland.co.uk. By post: FMID Payments Policy Team, Bank of England, 20 Moorgate, London, EC2R 6DA. Should you have any additional requirements, please contact us through one of the above channels and we can provide this in accessible formats. By responding to this consultation, you provide personal data to the Bank. This may include your name, contact details (including, if provided, details of the organisation you work for), and opinions or details offered in the response itself. We may use your details to contact you to clarify any aspects of your response. Responses may also be shared with the FCA, PSR, and HMT, considering the relevance of the consultation proposals to those organisations. Please refer to the Bank’s privacy notice which sets out how we handle personal data in the performance of our functions. Opens Opens

5: Public Sector Equality Duty
In developing the proposed framework for backing assets in a systemic stablecoin regime, the Bank has had due regard to its obligations under section 149 of the Equality Act 2010 (the Public Sector Equality Duty), including the need to consider impacts on persons who share relevant protected characteristics. The Bank has considered these issues as part of its policy development and, in line with the PSED, invited views in the 2025 consultation from stakeholders on whether the proposals may give rise to differential impacts on persons sharing protected characteristics, including religion or belief, and how any such impacts might be mitigated. In response to the consultation, respondents broadly agreed that the proposals do not create direct Equality Act impacts. Some noted potential indirect risks linked to digital access, accessibility and onboarding processes, which could affect certain groups if not implemented proportionately. These issues were viewed as manageable through inclusive design, clear communication and ongoing monitoring, rather than requiring changes to the core policy. The Bank has also considered whether aspects of the proposed framework, and particularly the treatment of interest-bearing backing assets, and the extent to which remuneration from such assets underpins issuers’ business models, could have differential impacts on firms or users seeking to operate in accordance with Islamic finance principles. In particular, certain Shari’ah compliant structures may restrict the holding of, or reliance on, interest-bearing instruments, which may in turn affect the ability of such firms to participate in, or operate viably within, the proposed regime where these form a core component of the framework. At this stage, the Bank’s assessment is that these considerations are unlikely to give rise to material barriers in all cases, noting in particular that the proposed framework contemplates the availability of non-interest-bearing central bank deposits as part of the composition of backing assets. However, the Bank recognises that the overall design of the regime, including the balance of eligible assets and associated economic incentives, may be relevant to the commercial viability of certain business models. The Bank invites similar feedback on the impact on equality principles from the policy and draft code of practice set out in this publication and will take those responses into account in determining whether any adjustments to the framework are appropriate and proportionate. Opens

6: Appendices
The 2025 consultation received 86 responses, of which 73 were from organisations, including 3 from academia, 12 from banks and financial institutions, 21 from fintech and crypto firms, and 21 from trade and industry bodies. The following respondents have specifically consented to have their names published, or have already publicly disclosed that they have responded to the consultation. Anjum Hoda The Association for Financial Markets in Europe (AFME) Aviva PLC Aztec Labs Circle Chainlink Crypto Council for Innovation (CCI) CryptoUK Electronic Money Association (EMA) Financial Markets Law Committee (FMLC) Global Digital Finance (GDF) Innovate Finance Institute of Chartered Accountants in England and Wales (ICAEW) Institute of International Finance (IIF) International Regulatory Strategy Group (IRSG)
Appendix 1: Respondents to the November 2025 consultation
paper on the proposed regulatory regime for sterlingdenominated systemic stablecoins, who have consented to the publication of their names Opens

International Swaps and Derivatives Association (ISDA) John Whittaker Lloyds Banking Group Monee Nadun Perera PricewaterhouseCoopers LLP Ripple Steering Committee of the Great British Tokenised Deposit (GBTD) Teya The Investment Association University of East London, The Centre of FinTech UK Cryptoasset Business Council (UKCBC) UK Finance Wall Street Blockchain Alliance (WSBA) Backing assets – Assets held by the issuer of a stablecoin as the mechanism through which the stablecoin maintains a stable value against fiat currencies. Central bank digital currency (CBDC) – Digital money issued by a central bank. Backing asset pool – The pool of backing assets held for a particular systemic stablecoin product. Central bank money (CeBM) – Money issued by a central bank, including central bank deposits used for settlement. Central Bank Liquidity Facility – A ‘backstop’ facility through which eligible systemic stablecoin issuers may obtain short-term central bank deposits against eligible collateral in a limited set of circumstances.
Appendix 2: Glossary
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Code of Practice – The Bank’s rules for recognised systemic stablecoin issuers, which give effect to the policy set out in this paper. Coinholder – A person or business holding a stablecoin. Commercial bank money (CoBM) – Money held in accounts at commercial banks. Distributed ledger technology (DLT) – A type of technology that enables the sharing and updating of records in a distributed and decentralised way. There are many different types of DLT platforms but they usually combine elements of four common features:
Direct payment system access – Access by an issuer to a payment system without relying on a sponsoring participant or intermediary. Financial risk reserve – A reserve of liquid assets held on trust to mitigate financial risks arising from backing assets. Indirect payment system access – Access to a payment system through a sponsoring participant, clearing framework, or other intermediary rather than directly. Payment system – Arrangement, or proposed arrangement, designed to facilitate or control the transfer of money between participants (such as individuals, businesses, and financial institutions) or digital settlement assets. This does not include arrangements for the physical movement of cash. Payment system operator – An entity responsible for managing or operating a payment system. A payment system may be recognised for regulation by the Bank of England and/or designated for regulation by the Payment Systems Regulator by HMT

Data distribution: many participants can keep a copy of the same ledger, and are able to
read and access the data;
Decentralisation of control: many participants can update the ledger, subject to agreed
processes and controls;
Use of cryptography: cryptography may be used to identify and authenticate approved
participants, confirm data records, and facilitate consensus with regard to ledger alterations. The use of this technology is not unique to DLT;
Programmability: computer-coded automation (such as smart contracts) can automatically
execute transactions when certain, pre-agreed conditions are met, such as triggering periodical interest payments on a bond. Opens

Permissionless ledger – A permissionless ledger is a type of ledger that allows any unidentifiable party to validate and authenticate transactions, and add new blocks to the chain. Proceed funds – Money received or placed in connection with assets in an asset pool, including coupon income, redemption proceeds, or proceeds connected with the sale or purchase of UK government debt securities. Service provider – An entity that provides services in, or to, the payment chain, including entities such as issuers, wallet providers and trading platforms. A service provider could be brought within the Bank’s remit as (i) it is systemic in its own right and therefore recognised by HMT as a service provider, or (ii) it provides essential services to a recognised payment system or service provider and is therefore specified by HMT in the relevant recognition order. Stablecoin – These are a form of digital assets that purport to maintain a stable value relative to a fiat currency by holding assets (which may be of variable value) as backing. Stablecoin pool – The pool of coins in issuance for a particular stablecoin product, including coins redeemed but not yet burned. Stablecoin product – A stablecoin defined by specified terms, where the units (or individual coins) issued are fungible with one another and collectively constitute a single product. Statutory trust – A trust established by statute under which money and assets are held by the issuer for the benefit of coinholders and other specified purposes. Systemic at launch – A stablecoin issuer considered systemically important from the outset of its operations. Systemic stablecoin – A stablecoin that is used as the DSA by a payment system or service provider that is recognised by HMT as systemic. Systemic stablecoin issuer – An issuer that has been recognised by HMT as systemic and is subject to the Bank’s systemic stablecoin regime. Temporary issuance guardrail – A temporary limit on the level of issuance per systemic stablecoin product, used as a transitional measure to mitigate risks to credit provision. Wallet – A gateway providing the information and technological means that coinholders need to access their stablecoins and interact with a ledger. Opens

Wind-down reserve – A reserve of liquid assets held on trust to cover the costs of returning funds to coinholders or transferring them to another service provider, and costs incurred in insolvency or special administration. AML – Anti-money laundering. Bank – Bank of England. CBDC – Central bank digital currency. CET1 – Common Equity Tier 1. CeBM – Central bank money. CoBM – Commercial bank money. CoP – Code of Practice. CPMI – Committee on Payments and Market Infrastructures. DLT – Distributed ledger technology. DMO – Debt Management Office. DSA – Digital settlement asset. DSS – Digital Securities Sandbox. FSB – Financial Stability Board. FSRC – Financial Services Regulation Committee. FCA – Financial Conduct Authority. FMI – Financial Market Infrastructure. FMI SAR – Financial Market Infrastructure Special Administration Regime. FPC – Financial Policy Committee. FSCS – Financial Services Compensation Scheme.
Appendix 3: List of acronyms
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FSMA – Financial Services and Markets Act.
GBP – British Pound Sterling.
HMT or HM Treasury – His Majesty’s Treasury.
KYC – Know your customer.
LCR – Liquidity coverage ratio.
PFMI – Principles for Financial Market Infrastructures.
PPL – Public Permissionless Ledger.
PRA – Prudential Regulation Authority.
PSR – Payment Systems Regulator.
Bank of England’s draft Code of Practice for sterling-denominated systemic stablecoin issuers
Appendix 4: Bank of England’s draft Code of Practice for sterlingdenominated systemic stablecoin issuers
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The Bank’s regime applies to systemic stablecoins and to other entities within a systemic stablecoin payment chain
where recognised by HMT. Further detail is outlined in Section 2.2.8. A systemic issuer could be a recognised payment system operator, a DSA service provider (as defined in section 182(5A) or the Banking Act 2009) or a specified service provider – refer to 1.1 (Application) of Part 1: Application and Definitions (Annex A of the Code of Practice).
The government has set out plans to consolidate the PSR within the FCA as part of efforts to streamline the UK
payments regulatory framework.
The Financial Services Regulation Committee report on regulation of stablecoins is available on the UK
Parliament website.
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The Bank will respond formally to the recommendations set out in the FSRC report in due course.
Refer to The UK Treasury bill market: consultation response , p19. Opens
Refer to 2.1 and 2.2 of the Backing Assets Part of the CoP which relates to re-use and re-hypothecation of repo
proceeds.
An issuer should manage their liquidity such that the majority of the 30% is not funded through repo proceeds, other than
in exceptional circumstances eg when an issuer is recovering from a stress. Opens
The governing body and senior management must oversee and, in the case of the governing body, approve the risk
management framework and these processes and systems. Issuers are also required to maintain a prudent custody policy.
The Code of Practice uses the term ‘stablecoin product' to avoid the risk of regulatory arbitrage by issuers who could
issue multiple fungible coins to get around the prevailing guardrail. The glossary provides a definition of the term ‘stablecoin product’.
Payment and settlement statistics | Bank of England.
Risks faced by the issuer, as a business; such as operational, technological and infrastructure risks, excluding financial
risks to the stablecoin backing assets pool.
Risks faced by coinholders due to financial risks to the backing assets and uncertainty of the ability to redeem their coins
in time and in full if the issuer fails.
Issuers must have the ability to implement orderly wind down if recovery attempts fail, therefore, issuers capital should
cover the cost of both recovery and wind-down plans, not one or the other.
Our regulatory framework aims to minimise the likelihood of losses to coinholders. However, in absence of coinholder
insurance coverage comparable to financial services compensation scheme (FSCS), coinholders may be exposed to losses in extreme tail risk events.
We have included a provision in the Code of Practice to make it clear that it does not apply to a systemic issuer that is
subject to a direction, to the extent set out in such direction – refer to 1.2 of Part 1: Application and Definitions (Annex A of the Code of Practice).
Including supplementary guidance proposed in the recent consultative report by CPMI-IOSCO on FMI’s general
business risk management and general business losses Opens
Stress events with statistical confidence level of 99.9% (1 in 1,000 events), similar to the requirement for banks under
the PRA capital framework .
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Refer to wind-down reserve section for details.
Such strategies may include selling all or part of the issuer’s operations to a willing third-party buyer through the transfer
of coinholder assets and liabilities, or terminating operations by returning funds to coinholders through redemption of all coins held by coinholders.
Such as the Financial Markets Infrastructure Special Administration Regime under Part 6 of the Financial Services
(Banking Reform) Act 2013.
Redemptions may be the more appropriate way to return funds to coinholders where a sale of all or part of the issuer’s
business, involving transfer of coinholder funds to a willing third party, is not feasible within a reasonable timeframe. Conversely, such a transfer may be more appropriate where continued redemptions until all coinholder funds are returned are not feasible within a reasonable timeframe. Issuers should identify the appropriate wind-down strategy for severe but plausible scenarios and hold sufficient resources to implement the strategy that require the greatest amount of own funds.
General business risk capital is calculated at the higher of (a) six months of relevant operating expenses or (b) cost of
recovery and orderly wind-down plans excluding costs provided for in insolvency/wind-down buffer.
After deducting extraordinary expenses, fully discretionary expenses, depreciation and amortisation.
Only one trust over the wind-down reserve is required even if an issuer has more than one systemic stablecoin product.
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Unlike for the financial risk reserve and backing asset pool, commercial bank money is a permissible asset for the winddown reserve. Therefore, proceed funds can be placed straight into a wind-down reserve funds account.
©2026 Bank of England
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Bank of England policy statement and draft rules on regulating systemic stablecoins

Lineage: In force

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