The British government said on Aug. 27 that it plans to give the Bank of England a new statutory objective supporting innovation in payment systems, stablecoins and other forms of digital money.
Bank of England Stablecoin Objective Remains Secondary
The secondary objective would remain subordinate to the Bank's primary responsibility for protecting financial stability. HM Treasury plans to implement the change through amendments to the Financial Services and Markets Bill. The proposed mandate would extend an existing innovation objective covering central counterparties and central securities depositories to the Bank's regulation of systemic payment systems. That remit includes systems using digital settlement assets such as stablecoins.
The government said the Bank would not have to support an innovation when doing so could undermine financial stability. City Minister Lucy Rigby said tokenization and distributed ledger technology have the potential to transform financial markets. Bank of England Deputy Governor Sarah Breeden welcomed the proposal. This regulatory development positions the UK alongside the EU in advancing stablecoin frameworks, as seen with the Revolut EURR launch under MiCA.
Systemic Stablecoin Rules Have Already Become Less Restrictive
The proposal follows the Bank of England's June policy statement covering sterling-denominated systemic stablecoins. The framework applies to stablecoins that HM Treasury formally recognizes as systemically important. The Bank removed planned temporary limits of 20,000 pounds for individuals and 10 million pounds for most businesses. It replaced those restrictions with an initial 40 billion pound issuance limit for each systemic stablecoin. Under the revised policy, issuers can hold as much as 70% of their backing reserves in short-term British government debt, with the remaining 30% held as non-interest-bearing deposits at the central bank.
The Financial Conduct Authority will supervise other qualifying stablecoin issuers, trading platforms, custodians and crypto intermediaries under the wider framework. The FCA finalized its main crypto rules on June 30, covering financial resilience, market integrity, stablecoin reserves, redemption and consumer standards. This UK framework parallels the broader institutional stablecoin competition covered in the WSJ report on banks weighing stablecoins.
FCA Licensing Deadlines Will Arrive Before Implementation
Crypto firms can apply for FCA authorization from Sept. 30, 2026, through Feb. 28, 2027. The mandatory regime is scheduled to begin on Oct. 25, 2027. Existing anti-money-laundering registrations will not automatically become full authorizations. Trading platforms, custodians, stablecoin issuers and staking intermediaries must submit applications covering their regulated activities. Parliament will decide whether the mandate becomes law, with amendments expected when the Financial Services and Markets Bill returns to the House of Lords on Sept. 7 and 9.
The policy adds a competitive response to U.S. stablecoin regulation. The U.S. GENIUS Act established a federal payment stablecoin framework in 2025, increasing pressure on Britain to provide issuers with a predictable route to market. The final statutory wording will determine which payment systems fall within the objective and how the annual reporting requirement operates.
