London: The Bank of England (BoE) has proposed a new regulatory framework for stablecoins, aiming to tighten oversight of digital currencies deemed “systemic” due to their potential impact on the financial system. Under the draft rules, issuers of such stablecoins would be allowed to invest up to 60% of their backing assets in short-term government debt.

The move reflects growing global concern over stablecoins’ rapid adoption and the risks they may pose to liquidity and market stability. Stablecoins, which are cryptocurrencies pegged to fiat currencies, are designed to maintain stable value, but their failure could trigger wider financial disruptions if left unchecked.

The BoE’s proposals seek to ensure that stablecoins recognized as systemic fall within the regulatory perimeter. Issu

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