LONDON, June 30, 2026 — The Financial Conduct Authority and the Bank of England have published a joint approach explaining how systemic stablecoin issuers would be regulated in the United Kingdom, including how firms may move from FCA-only supervision to joint oversight once recognised as systemic by HM Treasury.
The document sets out how responsibilities would be divided between the FCA, the Bank and, where relevant, other UK authorities. It also outlines transition arrangements for issuers that become systemic after launch, as well as a separate pathway for firms that may be recognised as “systemic at launch.”
Under the UK regime, the FCA will regulate all UK-issued qualifying stablecoins and, in due course, their use in retail payments. Stablecoins that become widely used in payments and may pose risks to UK financial stability may fall under joint regulation by the Bank and the FCA once recognised as systemic by HM Treasury.
A joint regulatory model for systemic stablecoins
The FCA and the Bank said their approach is intended to provide clarity and predictability for firms as the UK stablecoin market develops.
The FCA’s role will cover areas including consumer protection, conduct, financial crime, market integrity, competition and FCA rules applicable to qualifying stablecoin issuance. The Bank’s role will focus on financial stability risks linked to systemic stablecoins, including backing assets, capital and reserve requirements, safeguarding, failure arrangements and temporary issuance guardrails.
The authorities said full alignment between the two regimes is neither necessary nor always appropriate because the FCA and the Bank operate under different statutory objectives. Systemic stablecoin issuers are expected to face more stringent requirements than non-systemic issuers regulated only by the FCA.
Transition from FCA supervision to joint regulation
The joint paper explains how a UK stablecoin issuer could move from FCA-only supervision to joint regulation if HM Treasury recognises the firm as systemic.
Once recognised, the issuer would become subject to the Bank’s rules as well as applicable FCA requirements. However, the Bank said some firms may need time to meet the full requirements for systemic issuers.
The Bank expects a typical transition period to range from 12 to 36 months, depending on the issuer’s growth, risk profile, operational structure and potential implications for UK financial stability.
During that transition, the Bank may use its power of direction under the Banking Act 2009 to waive or modify specific requirements temporarily. The paper says this could support a phased move toward full compliance with Bank requirements, including direct payment system access, settlement account access, backing asset changes, capital and reserve build-up, and safeguarding arrangements.
Backing assets and redemption requirements
The joint paper identifies several key areas where systemic issuer requirements differ from the FCA regime for non-systemic issuers.
For backing assets, the Bank’s draft framework for systemic sterling-denominated stablecoin issuers would require at least 30% of backing assets to be held in central bank deposits at the Bank, with up to 70% held in short-term UK government debt securities of six months or less maturity.
By contrast, the FCA’s regime for non-systemic issuers allows a broader backing asset composition, including on-demand deposits, short-term government debt and, subject to notification, certain expanded backing assets.
For redemption, both regimes require holders to have a legally enforceable right to redeem at par. The Bank’s framework would require systemic issuers to complete redemptions within 24 hours and in real time wherever possible.
Systemic at launch
The paper also sets out how the authorities may treat firms that are considered likely to become systemic from the outset.
An issuer may be recognised as “systemic at launch” where HM Treasury determines, after consultation with relevant authorities, that the firm is likely to become systemically important in the UK even before reaching systemic scale.
The Bank said this pathway may apply where a new issuer’s business model, distribution network or planned use case indicates that the stablecoin could become critical to UK payments soon after launch.
For such firms, the Bank proposes a step-up approach that would allow a new systemic issuer to hold up to 95% of backing assets in short-term sterling-denominated UK government debt securities, with the remaining 5% held in unremunerated central bank deposits during an early stage.
The Bank may also place firms into mobilisation or scaling stages before they move to baseline supervision.
Digital Securities Sandbox
The paper also notes that the Bank and FCA will permit the use of certain stablecoins for securities settlement in the Digital Securities Sandbox, subject to further communication and relevant regulatory amendments.
The authorities said observing this use case in a controlled live environment could help identify how future regulation may need to be amended. Subject to changes to the Central Securities Depository Regulations, stablecoins could be used as a settlement asset by financial market infrastructures.
Consultation open until September
The consultation seeks feedback on the Bank’s proposed application of rules for systemic stablecoin issuers during transition.
The authorities are asking for views on issues including whether the onboarding approach is appropriate, how long transition should take, whether T+0 redemption creates practical challenges, and whether further guidance is needed for firms recognised as systemic at launch.
The consultation closes on September 30, 2026.
Why it matters
The joint approach gives stablecoin issuers, payment firms and institutional market participants a clearer view of how the UK intends to manage the boundary between ordinary cryptoasset regulation and systemic payments oversight.
For firms, the most important points are the proposed 12-to-36-month transition period, the division of responsibilities between the FCA and the Bank, the possibility of systemic recognition at launch, and the more stringent requirements for backing assets, redemption, capital, reserves and safeguarding once a stablecoin becomes systemically important.
The framework also shows that UK authorities are preparing for stablecoins to be used beyond crypto trading, including in retail payments and securities settlement, while seeking to preserve financial stability as the market develops.
