UK Wants to Give Bank of England New Stablecoin Role
London wants to bring stablecoins and tokenized payments under one framework, while the Bank of England must report on innovation every year. At the same time, the FCA is wrapping up the first rules for crypto and stablecoin companies.
Key Takeaways
- The UK government wants to give the Bank of England a legal duty to support innovation in stablecoins and digital money.
- Financial stability remains the main job, while the bank must report to Parliament every year on innovation in payments.
- The UK is also working on rules for tokenized payments, AI agent payments, and new stablecoin rules with an issuance cap.
The UK government wants to give the Bank of England a new legal duty to support innovation in stablecoins and other forms of digital money. Financial stability will remain the central bank’s main job. The move is meant to formalize the modernization of payments, while London is also working on rules for tokenized payments and looking at how they should handle AI agent payments.
New Role for the Central Bank
The proposed change comes through an amendment to the Financial Services and Markets Bill. According to the Treasury, the Bank of England will soon have to report to Parliament every year on how it promotes innovation in payment systems and digital money.
City Minister Lucy Rigby said financial stability will always be the Bank’s primary goal, but that the new secondary role should help the central bank keep pushing innovation in payments and digital finance. With that, the government wants to lock in its move toward a more formal framework for digital payments.
The plans fit into a broader UK approach where traditional and tokenized payments should fall under one regulatory framework. The country is not only looking at stablecoins, but also tokenized deposits and the question of how new payment forms with AI agents should work in practice. That lines up with the broader shift where stablecoins are increasingly seen as payment infrastructure, such as in Visa’s push into stablecoins and AI for payments.
Stricter but More Flexible Rules
In June, the Bank of England dropped earlier proposed temporary limits on holding stablecoins. Instead, it introduced a temporary issuance cap of 40 billion pounds, or about $54 billion (€46.3 billion), for each systemically important stablecoin. Issuers may hold up to 70% of their reserves in short-term UK government bonds, while the rest must be kept at the central bank.
The Financial Conduct Authority has also now finalized separate rules for crypto companies and stablecoin issuers. After feedback from the industry, the capital requirements were simplified. Companies can apply for a license starting September 30, while the regime is set to take effect on October 25, 2027.
Why This Matters
For European crypto readers, this matters mainly because the UK does not just want to regulate stablecoins more tightly, but also explicitly build them into the payments system. That could matter for issuers focused on sterling-denominated products and for firms dealing with different rules across multiple markets.
The timing also lines up with a market that has grown fast. According to DeFiLlama, the stablecoin market is now worth about $303 billion (€260 billion), up from around $200 billion (€171 billion) at the start of last year. Visa data also show that small retail stablecoin transactions have risen sharply, pointing to more use outside the pure crypto market.
