U.K. Plans Stablecoin Power Play by 2026, Borrowing from U.S. Rules

TLDR:

• Bank of England to start stablecoin consultation in November 2025, targeting full regulation by end of 2026.
• U.K. rules will require reserve assets in short-term government bonds similar to U.S. stablecoin standards.
• Interest-bearing assets will be permitted to help issuers sustain operations while supporting sovereign debt demand.
• The framework aims to strengthen user protection and bring stablecoins under direct financial supervision.

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The Bank of England is tightening its grip on digital assets. By the end of 2026, it plans to bring stablecoins under a clear regulatory framework. Bloomberg reported that a public consultation will begin on November 10, 2025. 

The rules are expected to mirror those in the United States, shaping how issuers manage reserves and interest-bearing assets. It’s a move to keep Britain’s crypto ecosystem competitive while maintaining financial control.

New Rules Set to Mirror U.S. Stablecoin Framework

The planned regulation will require issuers to back stablecoins primarily with government bonds that mature in under three months. According to Bloomberg, the model draws heavily from U.S. stablecoin guidance, where liquidity and short-term assets are key to risk management.

The consultation, starting November 10, 2025, will gather feedback from market participants and the public. The Bank of England expects to finalize the rules before 2027, allowing firms to adapt early. 

Wu Blockchain reported that the proposal includes room for interest-bearing reserves, giving issuers more flexibility to generate income while maintaining full collateralization.

This approach aims to protect users and prevent liquidity shortfalls like those that shook crypto markets in past years. It also encourages the use of secure government instruments, effectively linking stablecoin issuance with demand for U.K. sovereign debt.

Regulators believe this will make the market safer without discouraging innovation. The structure follows a growing global trend where central banks adopt tighter but clearer frameworks to attract regulated crypto activity.

Crypto Market Watches for the U.K.’s Next Move

Analysts say the U.K.’s move could reshape competition between global crypto hubs. By aligning with U.S. standards, Britain positions itself as a leader in financial compliance while staying attractive to blockchain firms.

The decision comes as the crypto market continues to expand across Europe, with countries like France and Germany already developing their own frameworks. Observers expect the Bank of England to coordinate with the Financial Conduct Authority (FCA) to ensure smooth adoption.

If implemented as planned, issuers like Circle and PayPal, which already hold stablecoin licenses in the U.S., could seek approval to operate in the U.K. under similar terms. That would accelerate institutional participation and build trust among investors wary of unregulated issuers.

Bloomberg’s report suggests the Treasury supports this direction, emphasizing financial stability and consumer protection. For crypto investors, it signals that digital asset rules are moving from experimental to structured oversight in major economies.

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