The British government said on Aug. 27 that it plans to give the Bank of England a new statutory objective aimed at supporting innovation in payment systems, stablecoins and other forms of digital money.
The secondary objective would remain subordinate to the Bank’s primary responsibility for maintaining financial stability. HM Treasury plans to introduce the change through amendments to the Financial Services and Markets Bill.
Bank of England’s Stablecoin Goal Remains a Secondary Priority
The proposed mandate would expand an existing innovation objective for central counterparties and central securities depositories to include the Bank’s oversight of systemic payment systems. That remit covers systems that use digital settlement assets such as stablecoins.
The government said the Bank would not be required to support innovation if doing so could threaten financial stability. The change therefore creates a formal duty to consider innovation while preserving the central bank’s existing risk controls.
City Minister Lucy Rigby said tokenization and distributed ledger technology “could transform financial markets.” She added that the objective would enable the Bank to support digital finance while preserving its financial stability mandate.
Bank of England Deputy Governor Sarah Breeden welcomed the proposal, saying it would encourage innovation “without compromising on financial stability,” according to the government’s announcement.
The Bank would submit an annual report to Parliament on its work under the objective. This requirement would give lawmakers a regular opportunity to assess whether payments regulation is keeping pace with emerging technology.
Systemic Stablecoin Rules Have Already Become Less Restrictive
The proposal follows the Bank of England’s June policy statement on sterling-denominated systemic stablecoins. The framework covers stablecoins that HM Treasury formally designates as systemically important.
The Bank scrapped planned temporary limits of £20,000 for individuals and £10 million for most businesses. Instead, it introduced an initial £40 billion issuance cap for each systemic stablecoin.
As previously reported, the Bank of England removed individual stablecoin holding limits and introduced a £40 billion issuance safeguard. The change followed industry warnings that such limits could restrict stablecoins’ use for payments.
Under the revised policy, issuers can keep up to 70% of their backing reserves in short-term British government debt. The remaining 30% would generally remain as non-interest-bearing deposits with the central bank.
Those rules apply to systemic stablecoins. Under the broader framework, the Financial Conduct Authority will oversee other qualifying stablecoin issuers, trading platforms, custodians and crypto intermediaries.
FCA Licensing Deadlines Will Come Before Full Implementation
The FCA finalized its core crypto rules on June 30. The framework addresses financial resilience, market integrity, stablecoin reserves, redemption processes and consumer protection standards.
Crypto firms can seek authorization from Sept. 30, 2026, through Feb. 28, 2027. According to the FCA’s rules, the mandatory regime is scheduled to take effect on Oct. 25, 2027.
Existing anti-money-laundering registrations will not automatically convert into full authorizations. Trading platforms, custodians, stablecoin issuers and staking intermediaries must submit applications for their regulated activities.
In related developments, the FCA set February 2027 as the application deadline for crypto firms. Companies that fail to apply within the designated window could lose access to transitional arrangements.
Parliament to Decide Whether the Mandate Becomes Law
The new objective has not yet come into effect. The government expects to introduce the amendments when the Financial Services and Markets Bill returns to the House of Lords on Sept. 7 and 9.
Parliament can approve, reject or revise those amendments. The final statutory language will determine which payment systems come under the objective and how the annual reporting requirement functions.
The policy also introduces a competitive dimension to US stablecoin regulation. The US GENIUS Act established a federal framework for payment stablecoins in 2025, putting greater pressure on Britain to offer issuers a predictable path to market.
US and British regulators have already broadened discussions around stablecoins. As crypto.news reported, officials from both countries supported one-to-one reserves and closer cross-border coordination, although the talks did not establish binding joint rules.
