The Bank of England (BoE) has formally classified stablecoins as a new form of money and confirmed it will begin accepting issuance applications from firms before the end of 2025. This landmark decision marks a significant step toward integrating digital payment tokens into the UK’s regulatory framework, while a parallel signal from the central bank’s Deputy Governor suggests that initial strict caps on holdings may be softened.
In a statement, Sasha Mills, the BoE’s Executive Director for Financial Market Infrastructure, outlined that the central bank is ready to accept applications for systemic stablecoins — those intended for widespread payment use and capable of affecting financial stability if they fail. Mills emphasized that the BoE will assess applications with a focus on stability, requiring proof of reserve backing, operational resilience, and anti-money laundering compliance comparable to traditional bank deposits.
The UK’s two-tier regulatory model assigns the BoE oversight of systemic stablecoins, while the Financial Conduct Authority (FCA) will handle other stablecoin activities for retail and corporate use. This approach, grounded in the Financial Services and Markets Act 2023, aims to balance innovation with monetary stability. The Treasury, BoE, and FCA have worked for years on this framework, and final rules are expected by late 2025.
Meanwhile, Deputy Governor for Financial Stability Sarah Breeden indicated in a Financial Times interview that the BoE’s earlier proposals — including a £20,000 cap on individual holdings and £10 million for corporates — may have been overly cautious. Breeden said the bank is reviewing alternative risk-management approaches, signaling a possible relaxation in response to industry feedback. The initial caps were designed to prevent runs on bank deposits during stress events, but the notion of easing them has been welcomed by crypto stakeholders.
If finalized, the new regulatory regime could allow UK consumers and businesses to use stablecoins for everyday payments, lowering cross-border costs and settlement times. For issuers, the BoE’s insistence on high-quality liquid assets will limit yield distribution but ensure a stability-first environment. The UK’s stance contrasts with more permissive jurisdictions like Singapore and the EU, potentially setting a benchmark for other central banks.
