Bank of England Sets Legal Goal to Support Stablecoins and Promote Payment Innovation

Prioritizing Financial Stability While Supporting the Development of Digital Finance

On August 27, 2026 (Thursday), the UK government announced its intention to establish a new legal goal for the Bank of England to support innovations in payment systems and digital currencies, including stablecoins.

The new goal is positioned as a "secondary objective" subordinate to the bank's primary responsibility of financial stability, requiring the promotion of digital finance development within the bounds of maintaining financial stability.

Expanding the Scope to Include Payment Systems with Stablecoins

The UK Treasury plans to introduce the new goal through amendments to the Financial Services and Markets Bill. The Bank of England already has a secondary objective to support innovations aimed at central clearing houses and central securities depositories, and this change will expand the scope to include systemically important payment areas.

This includes systems utilizing digital payment assets such as stablecoins. However, it does not seek to support innovations that could undermine financial stability, with existing risk management responsibilities taking precedence.

Lucy Rigby pointed out that tokenization and distributed ledger technology have the potential to transform financial markets. The new goal is expected to enable the Bank of England to promote innovation in payments and digital finance while maintaining financial stability, thereby supporting the competitiveness of the UK's financial services sector.

Sarah Breeden, Deputy Governor of the Bank of England, also welcomed the new policy, expressing that the new secondary objective would further bolster innovation support without compromising financial stability. The bank will report annually to Parliament on the progress of initiatives based on this goal.

Strengthening Policy Support Following Relaxation of Stablecoin Regulations

This policy follows the Bank of England's policy changes regarding systemically important stablecoins pegged to the British pound, which were announced in June.

The bank has removed the previously planned temporary holding limits of £20,000 (approximately ¥4.33 million) for individuals and £10 million (approximately ¥2.16 billion) for most businesses, instead setting an initial issuance cap of £40 billion (approximately ¥8.6 trillion) for major stablecoins. Additionally, issuers can hold up to 70% of their reserve assets in short-term UK government bonds, with the remaining 30% generally held as interest-free deposits at the central bank.

Meanwhile, the FCA (Financial Conduct Authority) will oversee other stablecoin issuers, trading platforms, custodians, and cryptocurrency intermediaries. The application period for cryptocurrency-related companies is set from September 30, 2026, to February 28, 2027, with a mandatory licensing system expected to commence on October 25, 2027.

The new secondary objective has not yet come into effect, and the government plans to submit amendments during the discussions of the Financial Services and Markets Bill in the House of Lords on September 7 and 9. The final details of the system will be determined after further parliamentary discussions.

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