Bank of England gets new stablecoin innovation goal

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.

Summary

• Britain plans a secondary Bank of England objective supporting innovation across payments and digital money.
• Financial stability will remain the Bank's primary duty, limiting how far innovation support can extend.
• The Bank would report annually to Parliament on progress under its proposed payments innovation objective.
• Lawmakers will next debate the Financial Services and Markets Bill on September 7 and 9.
• FCA authorization applications open September 30 before Britain's mandatory crypto regime begins during October 2027.

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.

Bank of England stablecoin objective remains secondary

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. The change therefore adds a formal duty to consider innovation without weakening the central bank's existing risk controls.

City Minister Lucy Rigby said tokenization and distributed ledger technology "have the potential to transform financial markets." She said the objective would help the Bank support digital finance while maintaining its financial stability mandate.

Bank of England Deputy Governor Sarah Breeden welcomed the proposal. She said it would support innovation "without compromising on financial stability," according to the government's announcement.

The Bank would report annually to Parliament on its work under the objective. This requirement would give lawmakers a recurring opportunity to examine whether payments regulation is adapting to new technology.

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 for individuals and £10 million for most businesses. It replaced those restrictions with an initial £40 billion issuance limit for each systemic stablecoin.

As previously reported, the Bank of England dropped individual stablecoin limits and introduced a £40 billion issuance guardrail. The change followed industry warnings that individual limits would restrict payment use.

Under the revised policy, issuers can hold as much as 70% of their backing reserves in short-term British government debt. The remaining 30% would generally be held as non-interest-bearing deposits at the central bank.

Those rules concern systemic stablecoins. The Financial Conduct Authority will supervise other qualifying stablecoin issuers, trading platforms, custodians and crypto intermediaries under the wider framework.

FCA licensing deadlines will arrive before implementation

The FCA finalized its main crypto rules on June 30. The framework covers financial resilience, market integrity, stablecoin reserves, redemption and consumer standards.

Crypto firms can apply for authorization from Sept. 30, 2026, through Feb. 28, 2027. The mandatory regime is scheduled to begin on Oct. 25, 2027, according to the FCA's rules.

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.

In related coverage, the FCA established a February 2027 application deadline for crypto firms. Companies that miss the application window may lose access to transitional arrangements.

Parliament will decide whether the mandate becomes law

The new objective has not yet taken effect. The government expects to introduce amendments when the Financial Services and Markets Bill returns to the House of Lords on Sept. 7 and 9.

Parliament can approve, reject or modify those amendments. The final statutory wording will determine which payment systems fall within the objective and how the annual reporting requirement operates.

The policy also 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.

U.S. and British regulators have already expanded stablecoin discussions. As crypto.news reported, officials from both countries backed one-to-one reserves and closer cross-border coordination, although those discussions did not create binding shared rules.