UK to Give Bank of England New Mandate to Support Stablecoin Innovation

Britain plans to hand the Bank of England a new statutory responsibility focused on encouraging innovation in stablecoins and other forms of digital money, while keeping financial stability as its top priority. The change would come through an amendment to the Financial Services and Markets Bill, and the central bank would be required to report annually to Parliament on how it’s advancing progress in payments and digital finance.

Turning Policy Ambition Into Formal Duty

This move effectively converts the government’s broader push to modernize the UK’s payment systems into an official responsibility for the central bank. Britain is working toward a unified regulatory approach covering both traditional payments and tokenized ones, including stablecoins and tokenized deposits, while also examining how existing rules might need to adapt for AI-driven payment systems. A senior Treasury official said the goal is to help the Bank keep supporting innovation without compromising its core stability mandate, positioning the UK as a leader in financial services.

Recent Regulatory Changes Already in Motion

Earlier this year, the Bank of England scrapped proposed limits on how much stablecoin individuals and businesses could hold, replacing them with a temporary cap on issuance for systemically important stablecoins. Under the new framework, issuers can hold a majority of their reserves in short-term government debt, with the rest kept as deposits at the central bank. Separately, the Financial Conduct Authority has finalized its own rules for crypto and stablecoin firms, with applications for authorization opening this fall and the full regime taking effect in late 2027.

A Fast-Growing Global Market

The broader stablecoin market has grown substantially, expanding well beyond its size at the start of last year, with US dollar-based stablecoins making up the vast majority of that total. Data from payments company Visa also shows a sharp rise in smaller, consumer-level stablecoin transactions over the past several years, suggesting growing everyday use beyond institutional trading.