Bank of England Could Get New Stablecoin Mandate Under UK Plans

The Bank of England is expected to maintain financial stability as its main priority while taking on a proposed secondary mandate aimed at supporting innovation in stablecoins and digital forms of money.

The UK government plans to add the new statutory objective through an amendment to the Financial Services and Markets Bill. The proposal would require the central bank to submit an annual report to Parliament outlining its progress in encouraging innovation across payment systems and digital money, the Treasury said.

The move would formally make payments innovation part of the Bank of England’s responsibilities. The UK is developing a unified regulatory framework for traditional and tokenized payments, including stablecoins and tokenized deposits, while policymakers are also assessing how future regulations could apply to payments conducted by AI agents.

City Minister Lucy Rigby said financial stability would continue to take precedence at the Bank of England. She said the additional objective would help drive innovation in payments and digital finance and support the UK’s ambitions to remain a leading global financial center, according to the Financial Times.

UK Refines Stablecoin Framework

In June, the Bank of England scrapped proposed temporary restrictions on the amount of stablecoins individuals and businesses could hold. Instead, the central bank proposed a temporary £40 billion ($54 billion) issuance limit for each stablecoin classified as systemic.

Under the proposed rules, issuers could keep up to 70% of their reserves in short-term UK government debt, with the balance held as deposits at the central bank.

The Financial Conduct Authority has separately completed its rules for crypto businesses and stablecoin issuers. The framework includes simplified capital requirements that were adjusted following feedback from the industry.

Firms can begin seeking authorization from Sept. 30, while the new regulatory framework is scheduled to come into effect on Oct. 25, 2027.

The global stablecoin market is worth about $303 billion, according to DeFiLlama, compared with roughly $200 billion at the start of last year. Dollar-pegged stablecoins continue to represent the majority of the market.

Smaller stablecoin payments have also grown rapidly. Visa data shows transactions below $250 increased from around $500 million in 2019 to almost $70 billion last year, indicating broader use of stablecoins among consumers.

The Treasury had not responded to CoinDesk’s request for comment by the time of publication.