TL;DR
- The United Kingdom plans to incorporate a formal secondary objective into the Bank of England to drive innovation in stablecoins and digital payments.
- The BoE will be required to report annually to Parliament on its progress. Financial stability will remain the primary responsibility.
- The FCA finalized rules for stablecoin issuers; firms will be able to apply for authorization from September 30. The regime will be in effect in October 2027.
The United Kingdom government announced its intention to incorporate a new secondary statutory objective into the Bank of England (BoE) aimed at supporting innovation in stablecoins, digital money, and payment systems. The measure would be implemented through an amendment to the Financial Services and Markets Bill and would require the central bank to submit annual reports to Parliament on its progress in this area, as reported by the Treasury.
This change makes the modernization of payments work the government had been driving a formal responsibility of the central bank. The initiative aims to build a unified regulatory framework covering both traditional and tokenized payments, including stablecoins and tokenized deposits, while also paying attention to payments made by artificial intelligence agents.
The United Kingdom Becomes a Digital Payments Laboratory
City Minister Lucy Rigby stressed that the United Kingdom’s financial stability will remain the BoE’s primary objective, but that the new secondary mandate will allow the bank to “continue driving innovation in payments and digital finance, ensuring the UK remains a global leader in financial services.”
At the same time, the central bank had already signaled greater regulatory flexibility in June, when it dropped the proposed temporary limits on stablecoin holdings by individuals and businesses. In their place, it established an issuance cap of £40 billion ($54 billion) for each systemic stablecoin. Issuers will be able to hold up to 70% of their reserves in short-term British government debt, with the remainder deposited at the United Kingdom’s central bank.
New Rules on the Way
Separately, the Financial Conduct Authority finalized the rules applicable to crypto firms and stablecoin issuers, incorporating simplified capital requirements after receiving industry feedback. Authorization applications open on September 30 and the regime will come into force on October 25, 2027.
The stablecoin market currently stands at around $303 billion, up from $200 billion recorded at the start of last year, according to data from DeFiLlama. Retail transactions below $250 climbed from $500 million in 2019 to nearly $70 billion last year, according to figures from Visa.
