UK to Introduce Strict Limits on Banks’ Crypto Exposure by 2026

The Bank of England (BoE) has announced plans to implement tighter rules limiting how much exposure U.K. banks can have to cryptocurrencies, targeting implementation in 2026. The initiative, highlighted by David Bailey, Executive Director of Prudential Policy at the BoE, aims to ensure financial stability by placing stricter guardrails around banks’ interactions with volatile assets.

Under the proposed framework, borrowed largely from Basel Committee recommendations, banks would be required to publicly disclose their cryptoasset exposure and keep it well below a certain threshold—likely around 1% of their Tier 1 capital. According to Bailey, this cautious stance is warranted: “a more restrictive approach is needed,” especially given the high price swings of major tokens like Bitcoin.

These reforms come in tandem with broader crypto sector regulation in the U.K., including the Financial Conduct Authority’s (FCA) plan to allow retail investors access to crypto exchange-traded notes (cETNs) starting this year. Additionally, the Treasury and FCA are developing a phased roadmap that would eventually cover stablecoin issuers, custody services, and asset manager exposure.

The BoE’s proactive approach reflects lessons learned from the 2023 collapse of crypto-linked banks such as Silicon Valley Bank and Silvergate, which showed how quickly contagion can spread from crypto into traditional finance. By requiring rigorous disclosure and setting prudent exposure limits, U.K. regulators aim to insulate financial institutions from similar cascades. Once finalized, these prudential rules will complement new FCA licensing regimes planned for 2026, marking a comprehensive regulatory overhaul.