Bank of England and FCA set out handoff for oversight of systemic UK stablecoins

The Bank of England and the Financial Conduct Authority on Monday published a joint approach explaining how oversight of UK stablecoin issuers will change if one becomes important enough to be deemed systemic by HM Treasury. The move gives firms a clearer map of who regulates them before and after that threshold is crossed.

In practical terms, the split is straightforward. The FCA, which oversees conduct in UK financial markets, will regulate all UK-issued qualifying stablecoins and, in time, their use in retail payments. But if a stablecoin becomes widely used and large enough to pose risks to UK financial stability, its issuance will shift to joint regulation by the Bank of England and the FCA after HM Treasury formally recognizes it as systemic. As the Bank’s approach document put it, “Within the United Kingdom’s (UK) stablecoin regime, the Financial Conduct Authority (FCA) will regulate all UK-issued qualifying stablecoins and, in due course, their use in retail payments. Where stablecoins are widely used in payments and may pose risks to UK financial stability, their issuance will be subject to joint regulation by the Bank of England (the Bank) and the FCA, once recognised as systemic by HM Treasury (HMT).”

The new publication matters because it clarifies the handoff as firms scale. Stablecoin issuers targeting the UK market now have a clearer sense of when they would move from FCA-only supervision to a model that adds the central bank, whose role is focused on risks to the financial system. The FCA said in its statement that “The Bank of England and the FCA have published a joint approach setting out how they and where relevant other authorities will work together to regulate systemic stablecoin issuers in the UK.” The paper also says the FCA will later consult on which of its rules should be switched off for systemic issuers to avoid clashes with the Bank’s eventual Code of Practice.

The joint framework builds on the Bank’s June 22 policy statement and draft Code of Practice for sterling-denominated systemic stablecoins, which set out the prudential standards such issuers would face. Under that earlier package, systemic sterling stablecoins would need backing assets made up of at least 30% central bank deposits at the Bank of England and up to 70% short-term UK government debt securities with maturities of six months or less. The Bank also proposed a temporary 40 billion-pound issuance guardrail for each systemic stablecoin, plus a liquidity backstop in exceptional circumstances through short-term collateralized loans against eligible UK government debt when private market liquidity is unavailable.

The trigger for joint oversight is not set by either regulator alone. Under the Banking Act 2009, HM Treasury decides whether a stablecoin issuer should be recognized as systemic, after consulting relevant regulators. Monday’s documents do not name any issuer as newly recognized systemic. Instead, they are aimed at explaining how responsibilities would be split once that designation happens and how firms would transition into the tougher regime.

The framework is part of the UK’s wider rollout of rules for crypto-related activities after the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026 brought issuing qualifying stablecoins into the regulated perimeter. For now, the immediate next step is consultation. The Bank said responses on its draft Code of Practice are due by Sept. 22, with the code intended to be finalized by the end of 2026. The regime is expected to allow recognized systemic stablecoins to operate in the UK from 2027.