Bank of England proposes framework to strengthen trust in stablecoins

Monday 10 November 2025 - 16:30

By: Sahili Aya

Bank of England proposes framework to strengthen trust in stablecoins

The Bank of England (BoE) unveiled on Monday new proposals aimed at boosting public confidence in stablecoins, cryptocurrencies designed to maintain a stable value by being pegged to traditional currencies. These digital assets, seen as a potential revolution in payments by bypassing traditional financial intermediaries, are mostly backed by the US dollar today.

“Our goal is to support innovation while building trust in this new form of money,” said Sarah Breeden, Deputy Governor for Financial Stability at the BoE. She emphasized that stablecoins are expected to “play a significant role in future payments.”

The initiative comes as regulators seek to reassure both individuals and institutions, particularly after the 2022 collapse of Terra, an algorithmic stablecoin that lost its peg and caused major losses across the crypto sector.

Under the proposed framework — open for consultation until February 10 — individuals would initially be allowed to hold up to £20,000 (around €23,000) in stablecoins, while companies would be limited to £10 million, with some exceptions. The BoE also plans to allow up to 60% of reserve assets backing systemic stablecoins to be held in short-term UK government debt securities.

The central bank will oversee so-called “systemic stablecoins”, while smaller issuers will fall under the Financial Conduct Authority (FCA). The FCA had already outlined its own rules in May, requiring issuers to maintain fully backed reserves matching the total value of their stablecoins.

The new UK regulatory framework is expected to take effect next year, following similar legislation in the United States. Meanwhile, the European Union has already implemented its own legal framework limiting the issuance of dollar-backed stablecoins within the eurozone.