Bank of England vs FCA: Who Regulates Systemic Stablecoins?

Not “vs”, as it turns out. The UK has built a two-part regime where crossing a threshold adds a second regulator rather than swapping one for another. Here is who does what, how you get designated, and what the £40 billion ceiling actually means.

WHERE THINGS STAND

22 June 2026 — Bank of England publishes its policy statement and draft Code of Practice for sterling-denominated systemic stablecoins.
30 June 2026 — Bank and FCA publish a joint approach document. It is itself a consultation, open until 30 September 2026.
End 2026 — the Code of Practice is intended to be finalised. · 25 October 2027 — the FCA regime commences.
No stablecoin has yet been recognised as systemic by HM Treasury. This is a regime being built before anyone is in it.

The framing of this question is usually wrong. People ask whether the Bank of England or the FCA regulates systemic stablecoins, as though one hands off to the other at some threshold.

That is not the design. The joint approach document published on 30 June 2026 is explicit that systemic stablecoin issuers will not sit within a wholly separate regime. The UK has built an integrated two-part framework: the FCA regulates every UK-issued qualifying stablecoin, and where a coin is widely used in payments and could pose risks to financial stability, HM Treasury may recognise the issuer as systemic and bring it into joint regulation.

You do not graduate from the FCA to the Bank. You acquire a second regulator while keeping the first.

The division of labour

Domain	Who leads
Conduct, consumer protection, competition and market integrity	FCA. It regulates all qualifying stablecoin issuers issuing from a UK establishment, and continues to supervise an issuer even after systemic recognition.
Prudential requirements — backing assets, capital and reserves, safeguarding, failure arrangements	Bank of England, once HM Treasury recognises the issuer as systemic.
Recognition itself	HM Treasury, assessed case by case.
Payment systems oversight	The Payment Systems Regulator also features in the authorities’ remit mapping, depending on the firm type.

The joint document does the unglamorous but essential work of setting out how supervisory responsibilities are allocated where an issuer falls within several remits, which FCA rules continue to apply and which are disapplied once a firm becomes jointly regulated, and how the transition operates. That last point turns out to be where most of the commercial risk sits.

How an issuer becomes systemic

There is no numerical trigger. Recognition is assessed case by case, with the Bank considering indicators including scale, the nature of the coin’s use, substitutability, interconnectedness, and use by the Bank in its role as monetary authority.

The practical reading is that a stablecoin used mainly as trading collateral is unlikely to be recognised. A stablecoin embedded in mainstream retail or corporate payments, settlement, or payroll is exactly what the regime is designed to catch. A systemic stablecoin, in the Bank’s framing, is one whose failure could disrupt payments across the wider economy.

That has a direct implication for business design: firms whose propositions target at-scale payment use cases should factor potential systemic recognition into their regulatory strategy from the outset rather than treating it as a distant problem. The cost of the systemic rulebook needs to be in the model before the product is built, not after it succeeds.

The U-turn: holding caps out, issuance ceiling in

The most significant development of 2026 was the Bank abandoning the proposal that had made its November 2025 consultation notorious.

Element	November 2025 proposal	June 2026 position
Individual holding limit	£20,000 per person in any single systemic stablecoin	Removed entirely
Business holding limit	£10 million	Removed entirely
Aggregate control	None	Temporary issuance guardrail of £40 billion per systemic stablecoin product, reviewed regularly
Transaction limits	—	None on size, frequency or type
Central bank deposits	40% minimum, unremunerated	30% minimum, unremunerated
Short-term UK government debt	Up to 60%	Up to 70%, maturities up to six months. Overnight reverse repos permitted.

The industry argued the per-holder caps were unworkable, and a House of Lords committee warned they were costly and complex to implement for what was meant to be a temporary measure. There was also a basic practical objection nobody satisfactorily answered: an issuer cannot police wallet totals for holders it cannot always identify.

The replacement is structurally different rather than simply looser. A £40 billion ceiling on total circulation per systemic product is a macroprudential control on the size of the market, not a restriction on individual users. The Bank has said it will review the guardrail regularly and remove it once risks to bank credit provision have eased.

Deputy Governor for Financial Stability Sarah Breeden framed the package as a milestone in delivering greater choice and innovation in UK payments.

The 30% that never earns anything

Here is the provision that will decide whether the UK regime is commercially viable, and it has received far less attention than the holding caps.

A systemic sterling stablecoin issuer must hold a minimum of 30% of backing assets in unremunerated deposits at the Bank of England. The remaining 70% can sit in short-term UK government debt with maturities up to six months, which does generate yield.

Do the arithmetic from an issuer’s perspective. Stablecoin economics run almost entirely on reserve income. A rule that parks 30% of the float in an account paying nothing removes roughly a third of the potential revenue available to issuers and service providers. Industry commentary has pointed out that this would make the UK unusual internationally in requiring a significant unremunerated holding at the central bank.

The Bank’s rationale is financial stability rather than revenue: central bank money is the safest possible settlement asset, and a meaningful share of it in the backing pool reduces the risk of a fire sale of reserves under redemption pressure. Both positions are coherent. But the commercial consequence is real, and it interacts with another rule — systemic issuers are barred from paying interest or dividends to holders for simply holding the coin.

So the issuer earns less and cannot compete on yield. Whatever a UK systemic stablecoin wins on, it will not be the return it pays you.

The other requirements worth knowing

Redemption at face value within 24 hours of a request.
A strengthened two-trust safeguarding model over the backing asset pool.
Reconciliation requirements and a defined redemption regime, alongside FCA safeguarding rules.
No interest or yield to holders, mirroring the position taken in the FCA regime and in other jurisdictions.

Crossing the line: the transition

An FCA-authorised issuer that gets recognised as systemic does not have to comply with the Bank’s rulebook overnight. The Bank expects a transition period running roughly 12 to 36 months, and may temporarily waive or modify some requirements during it.

That flexibility exists because the practical work is substantial. A newly systemic issuer may need to gain access to payment systems, restructure its backing assets, build capital and reserve buffers and meet stricter safeguarding rules — none of which happens quickly.

There is also a route for firms that expect to be systemic from launch. A step-up path would allow up to 95% of backing to sit in short-term government debt during an initial mobilisation stage, before the full 30/70 split applies. That is a meaningful concession for a startup issuer, because it front-loads revenue during the period when the business is least able to absorb a dead 30%.

What is still missing

This regime is not finished, and it is worth being precise about what remains open:

The joint approach document is a consultation, open until 30 September 2026. The operating model for dual supervision is not yet fixed.
The Code of Practice is in draft, intended to be finalised by end 2026.
Statutory trust legislation underpinning the safeguarding model has yet to be delivered.
The Central Bank Liquidity Facility — what support, if any, a systemic issuer could access under stress — remains to be published.
The application of the international principles for financial market infrastructures to systemic stablecoins is still to come.
No issuer has been recognised as systemic, and the Code will not bite until it is finalised and a firm is recognised.

The debate the UK is having with itself

It is worth setting out both sides honestly, because this is a genuinely contested policy question.

The case for caution	The case against
A stablecoin large enough to matter for payments is systemic infrastructure, and infrastructure failure is a public problem, not a private one.	The regime goes live in 2027, years behind MiCA and the US GENIUS Act, in a market where distribution advantages compound early.
Unremunerated central bank deposits are the safest settlement asset and reduce fire-sale risk under redemption stress.	A 30% unremunerated requirement removes roughly a third of issuer revenue and is unusual internationally.
The issuance guardrail protects bank credit provision while the market is unproven, and is explicitly temporary.	A ceiling on how large a product may become is an unusual thing to legislate before any product exists.
The Bank did move substantially on industry feedback — dropping the holding caps and easing the backing split.	Some argue the concessions came late enough that issuers had already routed sterling ambitions elsewhere.

The bottom line

The answer to the headline question is: both, in sequence and then simultaneously. The FCA regulates every UK-issued qualifying stablecoin from October 2027. If HM Treasury recognises an issuer as systemic, the Bank of England adds a prudential layer covering backing assets, capital, safeguarding and failure arrangements, and the FCA stays in place for conduct.

For anyone building a sterling stablecoin, the strategic question is not which regulator you prefer. It is whether your product is designed to succeed at a scale that triggers the second one — and whether the economics still work with 30% of your float sitting at the Bank of England earning nothing.

That calculation, more than any rule about who supervises what, will determine whether the UK gets a domestic stablecoin sector worth regulating.

Important

This article is general information about a developing regulatory regime, significant parts of which remain in draft or under consultation. It is not legal, regulatory or investment advice and is not a substitute for the Bank of England policy statement and draft Code of Practice, the joint approach document, FCA PS26/10 and the underlying legislation. Rules and figures may change before commencement.

Sources: Bank of England policy statement and draft Code of Practice on sterling-denominated systemic stablecoins, the Bank of England and FCA joint approach document, FCA PS26/10, plus analysis from Freshfields, Addleshaw Goddard, Lewis Silkin, Latham & Watkins, CoinDesk, Forbes, OMFIF and Payment Expert.