Non-systemic stablecoins used primarily for crypto trading, such as USDT and USDC, will remain under FCA oversight without such restrictions.
The proposals are expected to include temporary caps on stablecoin holdings for both individuals and businesses.
Reform has one of the most positive stances toward crypto in the UK, though the next general election is not due until 2029.
The crypto exchange's UK market, now including neobank challenger app Krak, remains its second-largest outside the U.S.
Six major UK banks have begun a live pilot of tokenized sterling deposits, an industry effort led by UK Finance and backed by Quant, EY and Linklaters.
Bailey also warned investors away from buying Bitcoin, characterizing it as a volatile, unbacked asset.
Reform also became the first UK political party to accept donations in bitcoin and other cryptocurrencies on Thursday.
BoE Gov. Andrew Bailey reflected on potential changes in the crypto regulatory environment globally, particularly following Trump's election.
Project Pyxtrial is a first step towards a tool that could support supervisors and regulators in proactively detecting issues in stablecoin backing, the report said.