Bank of England to publish stablecoin draft in June

The Bank of England will publish draft rules for systemic stablecoins in June and aims to finalize a regulatory framework by year-end 2026, Deputy Governor Sarah Breeden told an audience at the City Week 2026 conference in London on May 19.

Policymakers are revisiting earlier proposals after industry pushback. Officials are considering temporary guardrails on total stablecoin issuance rather than caps on individual holdings, a change intended to lower compliance costs for firms while protecting credit supply. The Bank said it will align its year-end timetable with the U.S. regulatory timeline.

On retail payments, Breeden said the Bank wants “a multi-money system that promotes competition and choice between robust forms of money.” Alongside bank deposits, that would include tokenized bank deposits, regulated stablecoins and potentially a retail central bank digital currency.

Traditional banking groups would be allowed to issue stablecoins only through non-deposit-taking, insolvency-remote entities. The Bank plans rules requiring clear, separate branding to distinguish stablecoins from insured bank deposits to reduce consumer confusion and contagion risks.

Breeden described tokenization as a way to reduce friction in wholesale markets by using shared ledgers, smart contracts and atomic swaps for equities, corporate bonds and investment funds. The Bank and the Financial Conduct Authority are moving pilots into live markets through a digital securities sandbox. Sixteen firms, including Euroclear, HSBC and the London Stock Exchange Group, have joined and expect to open live venues and settlement systems in the sandbox later this year.

The Prudential Regulation Authority will treat banks’ exposures to tokenized assets the same as non-tokenized equivalents when the underlying risks and legal rights are identical. The Bank will support the government’s pilot of a tokenized gilt, which would be the first tokenized sovereign debt issued by a G7 country if it proceeds. After upgrading its Real-Time Gross Settlement core last year, the Bank has launched a consultation to extend operating hours to near-24/7 by the early 2030s and plans a live “synchronisation service” targeted for 2028 to let tokenized markets settle directly against sterling central bank money.

The proposals cover regulatory design, market infrastructure and supervisory treatment and will move into formal consultation and legislative work in the coming months. Breeden added, “By acting now to enable responsible adoption, we can give the benefits of new technologies the best chance to be realized.”