New UK regime targets systemic stablecoin issuers
Stablecoin firms operating at significant scale could face stricter oversight as the Bank of England and FCA coordinate their regulatory responsibilities.
The Bank of England and the Financial Conduct Authority have set out how they will jointly regulate stablecoin issuers whose activities could pose risks to UK financial stability.
The joint approach forms part of the UK’s emerging stablecoin regime. Under the planned framework, the FCA will regulate UK-issued qualifying stablecoins, while issuers recognised as systemic by HM Treasury will also be subject to Bank of England oversight.
Stablecoin issuers may become systemic if their coins are widely used in payments and could create risks for the UK financial system. In those cases, the Bank would supervise prudential and financial-stability risks, while the FCA would continue to oversee consumer protection, competition and market integrity issues.
The framework includes transition arrangements for firms moving from FCA-only supervision to joint regulation. The Bank and FCA said this should help issuers scale without facing conflicting or duplicative requirements.
The approach also allows for issuers to be recognised as ‘systemic at launch’ where they are not yet operating at systemic scale but are likely to do so. Such firms could enter a phased supervisory pathway while meeting both FCA and Bank requirements.
The Bank is separately consulting on draft rules for sterling-denominated systemic stablecoin issuers. It intends to finalise its Code of Practice by the end of 2026, with regulated stablecoins expected to operate in the UK from 2027.
Why does it matter?
The UK framework is important because it creates a pathway for stablecoins to move from crypto-market products towards regulated payment instruments. By scaling supervision as issuers grow, the UK aims to support innovation without allowing systemically important stablecoins to develop outside financial stability oversight. The model could influence how other jurisdictions regulate digital money, especially where stablecoins are expected to support retail payments, wholesale settlement or cross-border transactions.
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