Bank of England set for new innovation mandate covering stablecoins
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Written by
Simonas Brazionis - Updated 2026-08-28 20:53:53
The UK government is set to introduce a new mandate for the Bank of England, aiming to foster innovation in digital payments, particularly stablecoins. This initiative will establish a secondary objective for the central bank, focusing on emerging forms of digital money and payment systems that utilize digital settlement assets. The Bank of England's primary objective of maintaining financial stability will remain unchanged.
This move aligns with the UK's broader efforts to advance stablecoin integration through regulatory adjustments, payment experiments, and increased collaboration with the United States. The new responsibility will expand upon an existing framework used for regulating central counterparties and central securities depositories, which are involved in clearing, holding, and settling financial assets.
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Parliamentary Debate and Implementation
City Minister Lucy Rigby indicated that advancements in digital payments technology, including tokenization and distributed ledger technology, have the potential to transform global financial markets. The government intends to implement this objective through amendments to the Financial Services and Markets Bill, with further parliamentary discussions scheduled for September 7 and 9. The Bank of England will be required to provide an annual report to Parliament detailing its progress towards this objective.
Industry Concerns Regarding Stablecoin Regulations
Maksym Sakharov, co-founder and CEO of WeFi, noted that while the objective is secondary to financial stability, the annual publication of innovation efforts in payments and digital money could increase public scrutiny on stablecoin regulations finalized by the central bank in June. Sakharov highlighted concerns regarding the requirement for systemic stablecoin issuers to hold a minimum of 30% of their backing assets in non-interest-bearing deposits at the central bank, suggesting this could impact the commercial viability of stablecoin businesses.
Recent UK Stablecoin Initiatives
The new mandate follows intensified UK efforts concerning stablecoins, which are crypto assets designed to maintain a stable value by tracking other assets like the US dollar. In August, a group participating in the Bank of England’s Digital Pound Lab initiated tests to explore the interoperability of a stablecoin and a simulated digital British pound in cross-border trade payments. This experimental platform operates without real customers or funds.
In mid-July, the UK and US issued a joint statement on stablecoins, expressing their intention to facilitate the use of stablecoins in cross-border finance and advocating for greater alignment of their regulatory frameworks. The Bank of England also revised earlier plans to limit individual stablecoin holdings, replacing these with a temporary issuance cap of 40 billion pounds ($52.9 billion) for each systemic stablecoin.
