Britain is set to expand the Bank of England’s responsibilities for payment-system innovation. On August 27, 2026, HM Treasury announced that the government intends to give the central bank a new secondary objective to support innovation in payment systems and emerging forms of digital money, including stablecoins.
The new mandate would remain subordinate to the Bank’s primary objective of protecting and enhancing UK financial stability. The government plans to make the change through amendments to the Financial Services and Markets Bill, which is due to return to the House of Lords for debate on September 7 and 9.
The Bank would also report annually to Parliament on how it is advancing the new innovation objective.
What the New Objective Actually Does
The Bank of England (BoE) already carries a secondary innovation objective when it regulates Central Counterparties (CCPs) and Central Securities Depositories (CSDs), two categories of critical financial market infrastructure, under the Financial Services and Markets Act 2023. The government now intends to extend that approach to the Bank’s regulation of systemic payment systems, including those using digital settlement assets such as stablecoins.
The Treasury’s announcement does not create a blanket requirement for the Bank to promote stablecoins. Instead, the proposed change would require the Bank to consider innovation within its regulatory responsibilities while continuing to prioritise financial stability.
City Minister Lucy Rigby KC MP said developments in digital payments technology, including tokenisation and Distributed Ledger Technology (DLT), the software architecture behind blockchain networks, “have the potential to transform financial markets across the globe.”
“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,” Rigby added.
BoE Deputy Governor for Financial Stability Sarah Breeden, who has led much of the central bank’s stablecoin work, welcomed the change. “This new secondary objective will further support” the Bank’s efforts to “maintain trust and drive innovation in UK payments,” she said.
The Policy Context
The announcement comes as the UK develops its regulatory framework for stablecoins and other digital forms of money.
In June 2026, the Bank published a policy statement and draft Code of Practice for sterling-denominated systemic stablecoin issuers. The proposed framework includes a temporary issuance guardrail of £40 billion for each systemic stablecoin product. The Bank said the guardrail is intended to mitigate risks to credit provision while allowing unrestricted use of systemic stablecoins by individuals and businesses, subject to other laws and regulatory requirements.
The Bank is consulting on the draft Code of Practice until September 22 and intends to finalise it by the end of 2026. The systemic stablecoin regime is expected to allow regulated stablecoins to operate in the UK from 2027.
Stablecoins that are not recognised as systemic will remain under the FCA’s regulatory framework. The Bank’s June publication specifically notes that its systemic regime will not cover stablecoins used for non-systemic purposes, including the buying and selling of cryptoassets, which remains the predominant use of stablecoins today.
The Financial Conduct Authority (FCA), which will handle non-systemic stablecoins, has been running parallel consultations. Its wider cryptoasset regime is scheduled to take effect on October 25, 2027 under the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026.
Stablecoins, cryptocurrencies designed to hold a steady value against a reference asset such as the US dollar, have grown into a roughly $308 billion market as of mid-August 2026, according to DeFiLlama data, up around 14% year-on-year.
Tether’s USDT and Circle’s USDC together account for the majority of stablecoin supply, while sterling-denominated stablecoins remain a relatively small part of the market.
The Global Stablecoin Race
The UK’s move comes as other major financial centres establish frameworks for stablecoins and digital payments.
In the United States, President Donald Trump signed the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) into law on July 18, 2025, creating the first US federal framework for payment stablecoins. It mandates 1:1 reserve backing in cash and short-dated US Treasuries, monthly public disclosures, and licensing through either state or federal regulators. Implementation is still working through six federal rulemaking bodies, with the effective date pointing to early 2027, as The Crypto Times has previously reported.
In the European Union, Regulation (EU) 2023/1114, known as the Markets in Crypto-Assets Regulation (MiCA), has been fully applicable since December 30, 2024. It splits stablecoins into two categories, E-Money Tokens (EMTs) pegged to a single fiat currency and Asset-Referenced Tokens (ARTs) backed by a basket, and requires issuers to secure authorization from EU regulators. Several non-authorized stablecoins have already been delisted from major EU-based venues under the regime.
In Asia, Hong Kong’s Stablecoins Ordinance came into force on August 1, 2025, making the issuance of fiat-referenced stablecoins in the city, or of Hong Kong dollar-pegged stablecoins anywhere in the world, a regulated activity requiring a licence from the Hong Kong Monetary Authority (HKMA). The HKMA received 77 expressions of interest during its initial application window, though it has made clear that only a handful of licences will be granted at first.
Other financial centres, including Singapore, Japan, South Korea and the United Arab Emirates, are also developing regulatory approaches for stablecoins and digital assets.
What the Industry Should Watch Next
For crypto and payments businesses, the near-term impact will depend on how the proposed objective is incorporated into legislation and subsequently applied by the Bank.
First, the drafting of the Bank’s final Code of Practice for systemic stablecoin issuers will provide an important indication of how the UK intends to balance innovation with financial-stability safeguards. The Bank expects to finalize the Code by the end of 2026, following the September 22 consultation deadline.
Second, the joint BoE-FCA approach paper on regulating systemic stablecoin issuers, published on June 30, 2026, sets out how the two regulators will divide labor. The framework provides for joint regulation where stablecoins are recognized by HM Treasury as systemic.
Major stablecoin issuers, including Circle, Tether and PayPal, have expressed interest in the UK market, while the development of a sterling-denominated stablecoin market remains an area of focus for policymakers and industry participants.
The Treasury’s announcement is not yet the final legislative change. The proposed wording must still pass through Parliament before the new objective becomes law.
For now, the policy direction is clear: financial stability would remain the Bank of England’s primary objective, while supporting innovation in systemic payments and digital settlement assets would become an additional statutory responsibility if Parliament approves the proposed amendments.
Also Read: JPMorgan Eyes Stablecoin as U.S. Banks Revisit Blockchain Payments
