Bank of England Stablecoin Policy: What Changed in June 2026

Video transcript

In June 2026, the Bank of England dropped proposed stablecoin holding limits. Its draft Code sets a forty billion pound guardrail, seventy thirty backing and 24-hour redemption.

The Bank had proposed caps of twenty thousand pounds per individual and ten million per business. Respondents said enforcing them would need bespoke smart contracts or identity tools.

Instead, each systemic product can initially be issued up to forty billion pounds, with every fungible coin counted together.

At least thirty percent of backing sits in Bank of England deposits, down from forty. Up to seventy percent can be short-term UK government debt.

Redemption must happen within 24 hours of a full request. The clock starts once due diligence is done and coins are returned, and stops at the payment order.

The Bank stays open to public permissionless ledgers, but says they may find it challenging to meet its expectations on accountability, settlement finality and operational resilience, including cyber security.

The Bank does not think multi-issuance suits systemic use. It prefers single issuance, backed by a single reserve.

To prepare, track supply daily across every chain, alert well below the guardrail, test redemption over weekends, and keep mint and upgrade roles off any single key.

The Code is still a draft the Bank intends to finalize by the end of 2026. Read the full article, or talk to Guardian about getting ready.

Sterling stablecoins that HM Treasury recognizes as systemic will answer to two regulators: the FCA for conduct, and the Bank of England for backing, capital and safeguarding.

The Bank's June 22, 2026 policy statement settles its positions, and its draft Code of Practice turns them into rules. Breaching the Code can lead to sanctions under the Banking Act 2009.

Consultation closed on September 22, 2026. As of November 5, 2026, the Bank has not published a final Code; it still intends to finalize it by the end of 2026.

This article explains the technical and security side of the Bank of England's systemic stablecoin policy statement and draft Code of Practice. It is not legal advice; confirm how it applies to you with counsel.

What the Bank Published

Three documents set the rules for UK systemic stablecoins.

The Code applies to systemic issuers incorporated in the UK. Non-UK issuers of a sterling systemic coin should set up a UK subsidiary.

From Holding Limits to a Guardrail

In November 2025 the Bank proposed per-coin holding limits of £20,000 for individuals and £10m for businesses.

Respondents said enforcing them would need bespoke smart contracts, ecosystem coordination or new digital identity tools. The Bank agreed and dropped them.

Instead, each systemic stablecoin product can initially be issued up to £40bn. Users face no limits on transaction size, frequency or type.

Part 7 of the draft Code sets the guardrail:

• No issuance once a product's total exceeds £40bn.
• If it exceeds, or is reasonably expected to, notify the Bank as soon as possible.
• Submit a plan and timetable to comply again.

The cap counts a whole "product": every coin fungible with every other. Issuing several fungible coins does not get around it.

The Bank expects to loosen, then remove, the guardrail once the risk to credit provision is mitigated. The £40bn is not a marker for when HM Treasury may recognize a coin as systemic.

How the Code counts supply

• Stablecoin pool: coins ever minted, minus coins ever burned.
• Product total: the pool times the coin's face value in sterling.
• Daily check: every 24 hours, count coins redeemed but not yet burned.

A redeemed coin must be burned, or kept in the pool and fully backed. Minting and burning are onchain events, so the pool is a running tally of that history.

The Code does not mention bridges. Guardian's reading: if an issuer's own contracts lock coins on one chain and mint the same product on another, minted minus burned counts both.

Agree with the Bank how bridged supply is counted before launch.

Backing Assets: The 70/30 Split

After most respondents said 40% hurt business viability, the Bank cut it to 30%. It says that is closer to historical liquidity stress events.

The draft Code adds these checks:

• The 30% is a best-endeavours minimum, so temporary dips can happen in stress.
• Notify the Bank promptly if deposits are below 20% at a reconciliation.
• Also notify it if they stay below 25% for five business days in a row.
• Either notice comes with a plan to restore 30%.
• Reconcile internally and externally at least once each business day.
• Fix any gap by the end of that business day; up to 5% excess may be held.
• One permitted fix: burn minted coins with no backing behind them.

Issuers recognized as systemic at launch could hold up to 95% in UK government debt while they scale.

Redemption Within 24 Hours

The 2025 proposal said end of day. The draft Code requires redemption as soon as practicable, and within 24 hours of a full redemption request.

• Clock starts: on receipt of a full redemption request.
• Full means: FCA request rules met, due diligence complete, coins returned.
• Clock stops: when the issuer makes the payment order to the holder.

The limit is lifted only where meeting it would breach a UK law or court order, or the holder wants another currency.

The FCA's rule, which non-systemic issuers follow, is the end of the next business day.

The Bank wants real time where possible, and liquidity prepositioned for payment orders. If a partner runs redemptions, the issuer stays responsible.

Our FG26/6 checklist covers impact tolerances for services like redemption.

Public Ledgers and Multi-Issuance

The Bank's view of public permissionless ledgers is unchanged from November 2025. It is open to them, but says they may find it "challenging" to meet its expectations on:

• accountability
• settlement finality
• operational resilience, including cyber security

It says probabilistic finality and public ledger governance need further policy work.

For each chain, document the finality rule, who runs validators and upgrades, and the keys behind mint, pause and upgrade. Our stablecoin security guide covers those controls.

Multi-issuance is out

Multi-issuance means several legal entities, under different rules, issuing one coin that is fungible across borders. The Bank does not think it suits systemic use in the UK.

Local reserves may not keep pace with coins crossing borders instantly, and holders may not be protected equally. The Bank prefers single issuance backed by a single reserve.

What Is Still Open

Under the proposed joint approach, the Bank and the FCA share operational resilience, outsourcing and redemption.

On recognition, the Bank can give an issuer time to comply by direction, typically 12 to 36 months. In its hypothetical, 24-hour redemption still applies from day one.

Our UK crypto deadlines post covers the FCA side and its 2027 dates.

What to Prepare Now

• A daily supply ledger: minted minus burned, across every chain.
• A guardrail alert well below £40bn, with the notification drafted.
• A redemption clock logging request, checks, coin receipt and payment order.
• A 24-hour redemption test over weekends and bank holidays.
• Burn or re-back logic for every returned coin.
• Daily internal and external reconciliation, with same-day fixes.
• Separate mint, burn, pause and upgrade roles, none behind a single key.

How Guardian Helps

Guardian's institutional advisory covers custody, signing, chains, bridges and contract design while they are still decisions.

Since January 2025, Guardian has run more than 50 engagements on USDT0, Tether's omnichain stablecoin, across 25+ chains.

On Polygon, it found a migration plan that would have left more USDT0 circulating than USDT available to redeem. It was fixed before the transactions ran.

The regulatory readiness assessment maps the Bank's and the FCA's provisions to your controls, and Managed Security monitors contracts on every block.

Frequently Asked Questions

Has the Bank of England finalized its systemic stablecoin Code of Practice?

No. As of November 5, 2026, it is still a draft. Consultation closed on September 22, 2026, and the Bank intends to finalize it by the end of 2026.

Did the Bank of England drop stablecoin holding limits?

Yes. It dropped the proposed £20,000 individual and £10m business limits. Each systemic stablecoin product instead faces a temporary £40bn issuance guardrail.

How fast must a systemic stablecoin be redeemed?

Under the draft Code, as soon as practicable and within 24 hours of a full redemption request: due diligence done, coins returned. Redemption is complete when the issuer makes the payment order.

Can a systemic stablecoin run on a public blockchain?

Possibly. The Bank is open to public permissionless ledgers, but says they may find it challenging to meet its expectations on accountability, settlement finality and operational resilience.

Sources

• Bank of England: Sterling-denominated systemic stablecoins, policy statement and consultation on draft Code of Practice (June 22, 2026)
• Bank of England: Draft Bank of England Systemic Stablecoin Issuer Code of Practice (PDF, June 22, 2026)
• Bank of England: Bank of England and Financial Conduct Authority's approach to joint regulation of systemic stablecoin issuers (June 30, 2026)
• FCA: Overview of our cryptoassets regime policy statements, including PS26/10 Stablecoin issuance (June 30, 2026)
• Guardian: USDT0 client story
• Guardian: USDT0 Polygon Deployment and Peer Verification report (August 7, 2025)