The United Kingdom’s top finance regulator, the Financial Conduct Authority (FCA), has set ambitious new growth targets for 2026, including support for locally issued stablecoins, artificial intelligence (AI) digitization, and tokenization.
According to an FCA press release on Wednesday, the regulator said it will open up its regulatory sandbox—a scheme for the safe testing of products and the support of innovative policy development—to firms wanting to experiment with the issuance of stablecoins.
In a December 9 letter to the Prime Minister, the FCA stated that the vast majority of its nearly 50 growth commitments, outlined at the start of the year, have been met, and additional initiatives to support growth have also been delivered.
To build on this success in the new year, the regulator outlined its goals for 2026, stating that it aims to deliver a new wave of growth initiatives focusing on “more efficient supervision, the digitalisation of financial services, increasing SME lending, and boosting trade and international competitiveness.”
Key plans for 2026 include finalizing digital assets rules and progressing U.K.-issued sterling stablecoins in order to provide “faster and more convenient” payments, as well as deepening U.K. market integration with the United States through the Transatlantic Taskforce for Markets of the Future.
“Our reforms help the U.K. maintain its global competitive edge in our world-leading wholesale markets, attract international investment, and lead on innovation in financial services,” said Nikhil Rathi, chief executive of the FCA. “We will continue to embrace a bolder risk appetite to support growth, while maintaining our commitment to protect consumers and ensure market integrity.”
The announcement of future support for stablecoins received swift and positive feedback from some industry experts.
Tom Brown, fintech and digital asset partner at law firm Shoosmiths, told CoinGeek that “the FCA’s decision to prioritise stablecoin payments and expand its regulatory sandbox is a strong signal that the U.K. intends to lead on digital finance innovation.”
He added that “by creating a safe environment for firms to test technology and compliance ahead of full regulation, the FCA is laying the groundwork for trust, resilience, and wider adoption of next-generation payment systems.”
Looking beyond 2026, the FCA said it would be actively supporting firms seeking to digitize, with 31 already testing AI use cases in the regulatory sandbox, and further enabling the U.K. asset management sector to tokenize funds, with the goal of “driving efficiencies and competition.”
UK focusing on stablecoins
As with many jurisdictions, stablecoins are a particular focus for regulatory support in the U.K., which has been generally slow to the party when it comes to digital asset legislation. However, the FCA has been making some progress on regulatory support for stablecoins.
On May 28, the FCA published two consultation papers, one on “stablecoin issuance and cryptoasset custody,” and the other on “a prudential regime for cryptoasset firms.” In its consultation paper on stablecoin issuance and cryptoasset custody, the regulator laid out its plan to ensure regulated stablecoins maintain their value and that customers are provided with clear information on how the backing assets are managed.
Specific proposals included that stablecoin issuers appoint independent third-party custodians to hold reserve assets; a minimum on-demand deposit requirement of 5%; a ban on issuers paying holders interest; requiring issuers to keep assets segregated in a statutory trust; a mandate that any stablecoin holder can request direct redemption of any amount, to be actioned by the end of the following working day; and a permanent minimum capital requirement for issuers of qualifying stablecoins, to be set at £350,000 (around $471,500).
Under the proposed rules, stablecoin issuers and crypto-asset custodians would also need to be authorized by the FCA and would be subject to ongoing supervision.
The deadline for feedback on the consultations was July 31 of this year. The FCA is currently considering input and said it aims to publish the final rules in 2026.
However, the regulator is still awaiting legislation that would officially grant it rulemaking authority over the digital asset sector. This legislation is still in draft form, without any clear indication of when it will be passed and grounded in statute.
In other words, it will likely be some time before the U.K. sees any substantial stablecoin regime come into force.
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Source: https://coingeek.com/uk-regulator-makes-sterling-stablecoin-payments-priority-for-2026/
