Overview
- The proposal allows issuers to hold up to 60% of reserves in short‑term UK government debt, with the remaining 40% kept as non‑interest‑bearing deposits at the Bank of England.
- A transitional option permits some firms moving from FCA oversight to hold up to 95% of backing in government debt initially to support viability.
- Temporary ownership limits would cap holdings at £20,000 for individuals and £10 million for businesses, with potential exemptions for larger firms and plans to lift the caps once risks recede.
- The Bank is considering liquidity backstops for sound issuers under stress, while prudential oversight would sit with the BoE and conduct supervision with the FCA for tokens designated systemic by HM Treasury.
- The consultation runs until February 10, 2026, with a joint BoE–FCA approach paper to follow next year, and industry figures welcomed the softer stance but criticized the caps and reserve constraints.