Bank of England Races to Match U.S. Stablecoin Rules, Safeguarding Global Financial Hub

The Bank of England has accelerated its stablecoin regulatory framework to align with U.S. timelines, targeting a 2026 implementation to safeguard financial stability and competitiveness. Deputy Governor Sir Jon Cunliffe emphasized the urgency, stating, "We must move at comparable speed to our U.S. counterparts to protect competitiveness and financial stability," as reported by FXStreet. This push follows growing global competition, particularly after the U.S. enacted the GENIUS Act in July, which has spurred international interest in stablecoin frameworks, according to Coinpedia.

The UK's approach mirrors the U.S. dual oversight model, where the SEC and CFTC classify stablecoins as securities and commodities, respectively, according to FXStreet. The BoE's proposed rules will impose temporary caps on stablecoin holdings—£20,000 for individuals and £10 million for businesses—with exemptions for certain use cases, the Coinpedia piece reported. These limits aim to mitigate risks to the mortgage market, which relies heavily on commercial bank lending, as explained by Deputy Governor Sarah Breeden in a CoinDesk report. The BoE plans to release its consultation paper on November 10, 2025, with final regulations expected by late 2026, the Coinpedia article says.

A key component of the UK's strategy is mandating high-quality reserves, such as government bonds or short-term securities, to back stablecoins, as outlined by Yahoo Finance. This mirrors the U.S. GENIUS Act's requirements and could facilitate cross-border harmonization. However, technical challenges remain, particularly in real-time reserve verification and audit mechanisms, the Yahoo Finance story noted. The BoE will engage industry stakeholders through Q1 2026 to refine the framework, according to FXStreet.

Collaboration with U.S. regulators is central to the UK's strategy. Breeden confirmed ongoing dialogue with the Federal Reserve and U.S. finance ministries, highlighting a joint task force announced in September to enhance cooperation on digital assets, Reuters reported. This alignment aims to prevent regulatory fragmentation and address potential mismatches in global liquidity pools, according to FXStreet.

The UK's stablecoin market, valued at over $160 billion, handles 40% of DeFi transaction volume and is critical for cross-border payments, per FXStreet. Regulators warn that delays could risk capital flight to less stringent jurisdictions. While the focus remains on "systemic" stablecoins—those with broad payment use—the Financial Conduct Authority will oversee smaller, non-systemic tokens with lighter regulations, Coinpedia reports.

Industry observers note the 2026 timeline provides market participants with preparation time while balancing innovation and stability. Asset managers may benefit from new custodial roles for stablecoin reserves, Yahoo Finance observed. However, concerns persist about the practicality of limits and their impact on adoption. Breeden dismissed these worries, asserting, "Less of an issue in practice than people might think," the CoinDesk report added.

As the UK races to finalize its framework, the outcome could influence global standards, given London's status as a financial hub, Yahoo Finance noted. The coming months will test whether regulatory collaboration and speed can address both innovation and systemic risks in the rapidly evolving stablecoin landscape.