The Treasury announced it would establish a new statutory “secondary objective” requiring the Bank of England to foster innovation in payments systems and digital money. The measure will be introduced as an amendment to the Financial Services and Markets Bill, scheduled for consideration by the House of Lords in September. Under the framework, the Bank’s primary responsibility for financial stability will remain unchanged, with the new objective positioned as subordinate to that core mandate. The Bank will be required to report annually to parliament regarding its progress on advancing innovation in these areas.
City Minister Lucy Rigby characterized the initiative as essential for maintaining the UK’s position as a global financial leader. She emphasized that tokenization and distributed ledger technology have the potential to substantially reshape financial markets. The announcement reflects sustained pressure from cryptocurrency firms and industry stakeholders who have contended that the Bank’s approach to digital assets has been excessively conservative.
Recent regulatory developments suggest the Bank has already begun adapting its stance. In June, when establishing rules governing sterling-pegged tokens, the Bank removed previously planned limits on individual stablecoin holdings and introduced a £40 billion issuance cap instead. Regulators also reduced the proportion of backing assets that issuers must maintain in zero-interest deposits at the central bank—a modification intended to enhance the commercial viability of UK stablecoins relative to offerings in competing jurisdictions.
Sarah Breeden, the Bank’s deputy governor for financial stability, indicated support for the new secondary objective, noting that it would reinforce ongoing collaborative efforts among the Bank, government, and other authorities. Sasha Mills, serving as the Bank’s executive director for financial market infrastructure, has previously stated that the institution treats stablecoins as “a new form of money” requiring equal robustness to other monetary forms. Applications from prospective issuers of systemic sterling stablecoins are expected to open by year-end.
The development occurs within a context of intensifying global competition over stablecoin regulation. The European Union implemented its MiCA regime for stablecoin issuers beginning June 2024, with the full framework becoming operative by December of that year. The United States enacted the GENIUS Act in the preceding year. Currently, approximately 99% of stablecoins in circulation are denominated in U.S. dollars, leaving sterling tokens with minimal market share—a gap the Bank seeks to address.
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