January 29 News, the Bank of England has explicitly prioritized the regulation and infrastructure development of systemic stablecoins and tokenized collateral by 2026, marking a significant step forward in the UK’s digital finance and blockchain financial regulation. Sasha Mills, Executive Director of Financial Market Infrastructure at the Bank of England, stated at the Tokenization Summit that the coming year will be a “key window for shaping the UK digital financial market framework.”
According to disclosed plans, the Bank of England will provide central bank deposit accounts to “systemic stablecoin” issuers and offer liquidity support when necessary. Its reserve structure will consist of 60% short-term UK government bonds and 40% central bank deposits to enhance stability and transparency. Additionally, regulators are evaluating temporary limits on personal stablecoin holdings set at £20,000 and corporate holdings at £10 million to prevent systemic risk proliferation.
Mills pointed out that stablecoins have significant advantages in retail and wholesale payment scenarios, with the potential to improve cross-border and local settlement efficiency, reduce costs, and shorten transaction times. The Bank of England plans to collaborate with the Financial Conduct Authority (FCA) to finalize regulatory rules by the end of the year, providing a clear path for compliant issuance and use.
Regarding tokenized collateral, the Bank of England will issue formal guidelines explaining how these assets can operate compliantly under the existing UK EMIR framework. Mills stated that if the underlying assets themselves meet regulatory collateral standards, their tokenized versions could also qualify after risk controls are implemented. This arrangement is seen as an important signal for promoting the integration of traditional finance and blockchain technology.
Meanwhile, the scope of the UK Digital Securities Sandbox will be expanded to include regulated stablecoins in wholesale settlement pilots, providing financial institutions with a controlled environment to validate new market structures. The Bank of England emphasizes that robust financial infrastructure, risk-based regulation, and international cooperation are core prerequisites for ensuring that innovation and financial stability can coexist.
This move not only sets a precedent for stablecoin regulation but also paves the way for the application of tokenized assets within mainstream financial systems.
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