10 things to know about the UK's stablecoin rules

The Bank of England and the FCA have set out a joint regime for using stablecoins as money in the UK. It’s markedly different from the US GENIUS Act and the EU’s MiCA and will decide who can build a profitable sterling stablecoin business. 

Here are the 10 things you need to understand. 

1. There are two distinct regimes

The FCA authorizes every UK stablecoin issuer. But once a coin is used as money at scale, HM Treasury can label it “systemic,” and from that day it’s regulated jointly by the FCA and the Bank of England. 

2. HM treasury judges what’s “systemic”

There’s no size threshold. HM Treasury weighs the coin’s scale, then judges how it’s used, how easily it could be replaced, and how connected it is to the rest of the system. The same volume can count as systemic for everyday payments but not for crypto trading. The upside of this approach is that it’s proportionate. The downside is that it’s less predictable. You may not know the exact moment you’re classified as systemic. 

3. The rules tighten the moment you’re systemic

Under the FCA, an issuer holds a market-based mix of deposits and short-term government debt. Under the Bank of England’s rules, a systemic issuer must hold at least 30% of its reserves in central bank deposits that earn no interest, and up to 70% in short-dated UK government debt (six months or less). So if you become systemic, you need to be ready. 

The 30% is there to prevent a run: these funds can be drawn instantly, without having to sell anything into a market. They earn nothing by design, because a stablecoin is treated as a way to pay, not a place to store value and earn a return. 

4. The UK rules are distinct

The US (GENIUS Act) asks for 100% of reserves in cash and Treasuries, with no central-bank-deposit floor. The EU (MiCA) wants 30% of reserves in bank deposits (60% for large “significant” tokens), but at commercial banks, not the central bank. The UK is the only one that requires a central bank to hold a 30% slice , earning nothing. This central-bank-deposit requirement is the single most distinctive, and most debated feature of the UK model. 

5. No issuer yield

All three frameworks ban the issuer itself from paying interest to holders. But the US GENIUS Act only bans issuer-paid yield. It doesn’t stop the exchanges. So today, platforms like Coinbase and Kraken pay around 4% in “rewards” on USDC, funded by reserve income the issuer passes through to them. Regulators are trying to close that gap: the Office of the Comptroller of the Currency’s February 2026 proposal would treat affiliate and third-party reward deals as banned unless the firms can prove otherwise. Despite the comment period ending the fight is ongoing, and the industry is pushing back. The EU’s MiCA already blocks these exchange rewards, and the UK is lining up with the EU here, not the US. 

6. The UK caps the coin, not the customer

Earlier UK proposals floated per-person holding limits: a cap on how much any one individual (and any one business) could hold. Those are gone. Instead, there’s a temporary £40 billion issuance guardrail per systemic stablecoin: a ceiling on the whole coin, reviewed regularly and removed once risks to bank lending are under control. Contrast that with the EU, which caps daily transaction volume for non-euro coins, and the US, which sets no holding or issuance cap at all and leans on full reserve backing and the yield ban instead. Each market is trying to protect against deposit flight and a squeeze on credit. 

7. Getting your money back is fast and reliable

Anyone holding the token has a direct legal right to demand payment from the company that issued it. The FCA says issuers must pay holders back by the end of the next business day. For the systemic (i.e., biggest, most important) issuers, the Bank of England makes the rule stricter: they have to pay back within 24 hours, and instantly whenever they can manage it. The reasoning is that fast payouts keep the system stable: the sooner people can get their money back at full value, the less likely they are to panic and trigger a run. 

8. Assets stay in the UK

The money backing the coin has to stay in the UK, kept separate and safe. For systemic issuers, the assets that back the coin must be held by UK companies, kept completely separate from the issuer’s own money, and checked every day to make sure the amounts add up. If a foreign company wants to issue one of these major pound-based coins, it has to set up a UK business to do it. The point is control: if a coin is big enough to affect the UK’s financial stability, the UK wants to be sure it can actually get to the money. Especially if the issuer collapses and has to be shut down. 

9. Growing big won’t destroy you overnight (but it might still hurt)

The Bank of England gives an approved issuer 12 to 36 months to adjust, using its Power of Direction to phase the rules in gradually so that success and fast growth don’t suddenly push the issuer off a cliff. Companies expected to be major players right from launch get a gentler “step-up” path. They can start with up to 95% of their reserves in government debt and move toward the full split over time. This is a sensible design. But having 30% of your reserves earn nothing, while also paying holders no interest, makes it harder for any pound-based issuer to turn a profit. 

10. The consultation is not finished

The Bank’s consultation on its draft Code of Practice runs to 22 September 2026, with a parallel joint FCA and Bank consultation closing on 30 September. The Bank expects to finalize its Code by the end of 2026, ahead of the regime going live on 25 October 2027. Failure and resolution rules, how the guardrail is calibrated, and the terms of the central-bank lending backstop are all still open. If you’re a bank, issuer or payment service provider (PSP), this is the moment to model the economics and put your view on the record. 

So, what’s the takeaway?

Of the three big frameworks, the UK’s is the most conservative. Money is held at the central bank, there are quick payouts, assets are kept in the country, and there is a firm limit on how much any one coin can grow. If your question is “Is it safe?”, the answer is, in theory, yes. 

The more pressing question is, “Can anyone make money doing it?” 

Right now, a US dollar coin can effectively get holders around 4% return through a rewards workaround on exchanges. Meanwhile, a UK issuer earns nothing on the money parked at the central bank and isn’t allowed to pass any return on to holders at all. If you can figure out the economics, the reward is a trustworthy, serious-grade pound stablecoin. But the safest set of rules could end up being one no one can afford to build under. 

The next six months of consultation will show us which way it goes. 

If you’re figuring out what this means for your reserve strategy, how you handle redemptions, or your path to getting authorized, we’d love to hear from you. Reach out today if you’d like to talk it through.