Britain plans new Bank of England objective for stablecoins

Britain plans to give the Bank of England a new statutory objective to support innovation in stablecoins and other forms of digital money, while keeping financial stability as its primary responsibility.

The government plans to add the secondary objective through an amendment to the Financial Services and Markets Bill. The central bank would have to report annually to Parliament on how it is advancing innovation in payment systems and digital money, the Treasury said.

The change would turn the government’s push to modernize payments into a formal responsibility for the central bank. Britain is working toward a single regulatory framework covering traditional and tokenized payments, including stablecoins and tokenized deposits, while exploring how the rules should adapt to AI agent payments.

“Whilst financial stability will always remain the Bank’s primary objective, this secondary objective will support the Bank to continue to drive innovation in ⁠payments ​and digital finance, ensuring that the UK ​remains a global leader in financial services,” City Minister Lucy Rigby said, the Financial Times reports.

The Bank in June dropped proposed temporary limits on how many stablecoins individuals and businesses could hold, replacing them with a temporary 40 billion pound ($54 billion) issuance cap for each systemic stablecoin.

Issuers could hold as much as 70% of their reserves in short-term British government debt, with the remainder kept as central bank deposits.

The Financial Conduct Authority has separately finalized rules for crypto firms and stablecoin issuers, including simplified capital requirements introduced after industry feedback. Firms can apply for authorization from Sept. 30, with the regime scheduled to take effect on Oct. 25, 2027.

The stablecoin market is valued at around $303 billion as of this writing, up from around $200 billion at the beginning of last year, according to DeFiLlama data. The lion’s share of that is currently in the form of U.S.-dollar stablecoins.

Retail investor-sized stablecoin transactions below $250 have risen from $500 million in 2019 to nearly $70 billion last year, according to Visa data that points to growing consumer use.

CoinDesk has reached out to the Treasury for comments but hasn’t heard back at the time of writing.