Bank of England sets rules for stablecoins, limiting issuance to £40 billion and capping interest-bearing assets at 70%.
The Bank of England released proposed stablecoin regulations, establishing a framework for digital currencies pegged to assets like the British pound or U.S. dollar. The rules include a £40 billion cap on individual stablecoin issuance and restrict interest-bearing assets to 70% of holdings, with the remainder in central bank deposits.
The guidelines aim to create a trusted stablecoin regime in the UK, aligning with efforts in the U.S. and Canada. Regulators plan to finalize the rules by year-end, with implementation targeted for 2027. Stablecoins are seen as tools for faster, cheaper cross-border transactions.
The Bank of England and the Financial Conduct Authority collaborated on the framework, which seeks to balance innovation with financial stability. The 70% limit on short-term UK government debt holdings is designed to mitigate risk in the sector.