Why are both regulators involved?
Because a stablecoin can be two things at once: a cryptoasset product issued and used in a market, and a payment arrangement that could matter to the wider financial system if it becomes widely used. The FCA’s role is the broader cryptoasset and conduct perimeter. The Bank of England’s role is narrower and focuses on issuers recognised as systemic by HM Treasury, where disruption could threaten financial stability. Those roles can overlap, so the proposed UK framework uses joint regulation for systemic issuers rather than assigning every stablecoin to the Bank.[1][2][4]
That does not mean every stablecoin is regulated by both authorities. Under the published approach, UK-issued qualifying stablecoins that are non-systemic sit within the FCA regime. A stablecoin issuer may come within the Bank’s remit only after HM Treasury recognition as systemic, or if it falls within one of the related systemic digital-settlement-asset categories in the legislation. The Bank’s June 2026 rules were still in draft Code of Practice form when this article was checked.[1][2][3]
Nor does regulation mean that a stablecoin is safe, guaranteed, or protected like a bank deposit. It describes the responsibilities and requirements of public authorities; it is not a promise about a particular token or issuer.
The short version
- FCA: the main regulator for UK-issued qualifying stablecoin issuance, custody and related cryptoasset activities. Its published stablecoin rules cover areas such as backing assets, safeguarding, redemption and disclosures.[5][6]
- Bank of England: the prudential and financial-stability authority for systemic stablecoin issuers once HM Treasury recognises the relevant payment system or service provider as systemic.[1][2]
- HM Treasury: the authority that makes the recognition decision under the framework described by the Bank and FCA. Recognition is the trigger that brings an issuer into the Bank’s systemic remit; it is not a label that says a coin is safe.[1][3]
- PSR and other authorities: the wider payments picture can also involve the Payment Systems Regulator, and in some cases the PRA or other bodies. The precise allocation depends on the firm, activity and legal designation.[1]
FCA rules and Bank rules answer different questions
The easiest way to understand the boundary is to ask what could go wrong.
FCA oversight: what is the cryptoasset firm doing to customers and markets?
The FCA’s regime is concerned with the activities of firms in the cryptoasset perimeter and the outcomes for users and markets. Its stablecoin issuance policy statement covers UK-issued qualifying stablecoins and includes rules on backing assets, safeguarding, redemption and information for holders.[5][6]
The FCA’s broader cryptoasset regime also covers activities such as operating trading platforms, dealing, arranging, custody, lending and borrowing, and staking, where the relevant conditions are met. The FCA says the full scope of its new regulated-activity regime expands from 25 October 2027, giving firms time to prepare.[5]
In plain English, the FCA side asks questions such as:
- Is the issuer carrying on a regulated activity in the UK?
- Are the backing assets and safeguarding arrangements described clearly?
- Can holders understand the redemption terms and relevant risks?
- Are cryptoasset firms meeting conduct, disclosure, operational-resilience and financial-crime requirements that apply to their activities?
Those questions matter whether a stablecoin is small, growing, or used mainly in cryptoasset trading. They do not depend on the token becoming a systemically important payment instrument.
Bank of England oversight: could failure affect the financial system?
The Bank’s concern changes when a stablecoin is used at scale in payments. Its June 2026 policy statement says systemic stablecoins are those widely used in payments that may pose risks to UK financial stability. The Bank’s remit would apply jointly with the FCA once HM Treasury recognises the issuer or related service provider as systemic.[2]
The Bank’s draft Code of Practice addresses the risks that come with scale and financial interconnectedness. The policy statement discusses capital, reserves, safeguarding and trust arrangements, redemption, payment access, remuneration and failure arrangements. It also proposes a central-bank liquidity facility for systemic stablecoin issuers.[2]
The Bank and FCA’s joint paper says systemic status is assessed case by case. Indicators include scale, the nature of use, substitutability, interconnectedness and use by the Bank in its monetary-authority role. The same amount of activity may have different financial-stability implications depending on whether a stablecoin is used for cryptoasset trading or everyday payments.[1]
This is why the Bank is not simply a second FCA for every stablecoin. Its statutory objective and risk lens are different. A payment instrument used by households and businesses at large scale could create risks to liquidity, confidence, credit provision or the orderly functioning of payment arrangements that are different from the risks of a token used mainly inside cryptoasset markets.
How the boundary works in practice
The current framework is better understood as a possible path than as a permanent two-box classification:
- An issuer starts within the FCA part of the regime if it is issuing a UK-issued qualifying stablecoin and is not recognised as systemic.
- The stablecoin grows, or its expected business model indicates that it may operate at systemic scale.
- HM Treasury considers whether the relevant payment system or service provider meets the statutory recognition criteria, after consulting the relevant authorities.[1][3]
- If the issuer is recognised as systemic, it moves into joint Bank-FCA regulation. Some requirements may align, while others remain different because the authorities are addressing different risks.[1]
- The authorities supervise the transition rather than treating recognition as an instant claim that every operational change has already happened. The joint publication sets out transition arrangements and a proportionate approach for firms recognised as systemic at launch.[1]
A systemic issuer can therefore have to comply with FCA rules and Bank requirements at the same time. The joint paper says the FCA will determine which of its rules are disapplied where needed to avoid conflicts with the Bank’s requirements, while the Bank’s rules apply to the systemic part of the regime.[1]
FCA and Bank of England compared
- Main trigger: FCA rules attach to regulated activities and the UK-issued qualifying stablecoin perimeter. Bank involvement requires HM Treasury recognition of systemic status.[1][5]
- Primary concern: The FCA focuses on consumer protection, market integrity, competition and the conduct of cryptoasset firms. The Bank focuses on financial stability and the resilience of systemic payment arrangements.[1]
- Typical scale: FCA supervision covers non-systemic issuers and related cryptoasset activities. The Bank’s remit is for issuers or service providers whose role may be systemic, including where a stablecoin is widely used in payments.[1][2]
- Rulemaking stage: The FCA published final rules for stablecoin issuance in PS26/10. The Bank published policy positions and consulted on a draft Code of Practice, with an intention to finalise that Code by the end of 2026, subject to the process described in its publications.[2][6]
- What the label does not mean: Neither “FCA-regulated” nor “systemic” is a guarantee that a stablecoin will hold its value, that a holder will avoid losses, or that a claim will be covered by a compensation scheme.[5][6]
What is still unsettled?
The FCA has published final stablecoin-issuance rules, but the wider regime is being phased in and some policy work remains. The FCA says further work is planned as stablecoin payment use cases develop, including work on resolution of stablecoin issuers.[5]
The Bank’s systemic framework was not wholly final when checked. Its policy statement included consultation on a draft Code of Practice, and the Bank said it intended to finalise the Code by the end of 2026. Supporting materials were also expected to follow in 2027.[2][3]
That distinction matters. A consultation, draft code, intended timetable or proposed transition arrangement is not the same thing as an operative final rule. Dates and requirements can change, and the legal text in force at the time should take priority over a summary article.
What this means for readers
For a reader comparing stablecoins, the FCA/Bank boundary is a map of public responsibilities, not a product rating. Check which activity is being regulated, which authority is named, whether HM Treasury has recognised the relevant issuer or payment system as systemic, and what the issuer’s own terms say about redemption and losses.
Do not infer that a stablecoin is safe or protected because an issuer is authorised, because a token is described as systemic, or because backing and redemption rules exist. Those are regulatory concepts, not assurances of a particular outcome.
For background, see stablecoins, CBDCs and digital money: UK terms and what is a blockchain?. The site also explains blockchain finality and crypto wallets, private keys, addresses and seed phrases.
Future update note: Recheck this article after the Bank of England finalises its Code of Practice and when the FCA, HM Treasury or other authorities publish further rules, guidance, recognition decisions or commencement dates. The next scheduled editorial check is 23 March 2027, or sooner if a regulator changes the framework.
Sources
[1] https://www.bankofengland.co.uk/paper/2026/boe-and-fcas-approach-to-joint-regulation-of-systemic-stablecoin-issuers
[2] https://www.bankofengland.co.uk/paper/2026/ps/sterling-denominated-systemic-stablecoin
[3] https://www.bankofengland.co.uk/news/2026/june/boe-launches-policy-statement-and-draft-rules-on-regulating-systemic-stablecoins
[4] https://www.fca.org.uk/news/statements/fca-and-bank-england-set-out-approach-joint-regulation-systemic-stablecoin-issuers
[5] https://www.fca.org.uk/publications/policy-statements/cryptoasset-regime
[6] https://www.fca.org.uk/publication/policy/ps26-10.pdf