You can't have it all — tension comes as the Bank of England changes regulations to make stablecoins "safe and mainstream"
The Bank of England has released a follow-up draft Code of Practice for systemic sterling stablecoins. The change comes after widespread industry pushback, including an 84,000-signature consumer petition which claimed the original code would leave sterling stablecoins commercially useless.
The framework claims to support safe innovation and enable UK-issued stablecoins to develop as trusted forms of digital money — but have attempts to keep sterling “safe” whilst making stablecoins “mainstream” gone too far?
What’s changed?
This is a softened version of the framework first proposed in November 2025. It scraps mooted £20,000 individual and £10 million business holding caps, replacing them with a £40 billion issuance guardrail per systemic coin. It’s a step in the right direction, but this “world-leading regime” is still markedly more cautious than its major counterparts, capping how large a sterling stablecoin can grow while the US and EU impose no equivalent ceiling.
Andrew Jones of ChilliMint puts it like this:
“What’s also becoming clear is that stablecoins aren’t heading towards one global model. The US has its approach. Europe has MiCA. The UK is building its own framework. Stablecoins were supposed to remove borders, but regulation is increasingly redrawing them.”
UK regulations will come into force in 2027. In the meantime, UK consumers and businesses will default to USDC and USDT. Without a low-friction sterling alternative, they’ll likely stay there.
Slow and steady…
The UK has moved slowly. However, as a single market, proportionate regulation is key — and competition with US dollar hegemony was never realistic. The EU has been pushing the digital euro for years, yet dollar-pegged stablecoins still dominate global markets by an overwhelming margin.
The more achievable goal is domestic relevance. In cross-border transactions and day-to-day settlement, a regulated sterling alternative keeps GBP in the loop. As agentic commerce accelerates, stablecoin use will grow. When agents start executing transactions autonomously, a GBP-pegged option will be critical infrastructure.
With no unified global model emerging, the UK must favour self-protection over attempts to win the race. These regulations will not necessarily bolster GBP to compete with USD, but they will protect the system without strangling innovation, keeping the UK on track.