UK Treasury Grants Bank of England New Statutory Duty to Foster Stablecoin Innovation

The UK Treasury announced on Wednesday that it will give the Bank of England a new statutory objective to support innovation in payments and digital money.

The amendment to the Financial Services and Markets Bill, scheduled for debate in the House of Lords next month, introduces a secondary duty that sits beneath the Bank’s primary responsibility for maintaining financial stability.

Under the new requirement, the Bank of England must report annually to Parliament on its progress toward fostering innovation in payment systems and digital assets.

Minister Lucy Rigby stated, “While financial stability remains our foremost priority, this secondary objective will empower the Bank to drive innovation in payments and digital finance, preserving the United Kingdom’s position as a global leader in financial services.”

The announcement follows calls from cryptocurrency firms, which had accused the central bank of taking an overly cautious stance on digital currencies.

The Bank of England and stablecoins

The central bank’s recent rule changes for sterling‑pegged stablecoins removed a planned cap on issuer exposure and lowered the share of backing assets that must be held in zero‑interest deposits at the Bank, measures intended to make UK‑denominated stablecoins commercially competitive.

Sarah Breeden, Deputy Governor for Financial Stability, welcomed the new statutory objective, remarking, “The Bank, together with government and other authorities, is already investing heavily in maintaining trust and advancing innovation in UK payments. This secondary objective will further support that effort.”

Sasha Mills, Executive Director for Financial Market Infrastructure, noted earlier this year that stablecoins represent “a new form of money” that should be “equally robust” as traditional instruments. Applications from prospective issuers of systemic sterling stablecoins are expected to open before year‑end.

The policy shift comes amid intensifying international competition. The European Union’s MiCA framework has been in force for stablecoin issuers since June 2024, and the United States enacted the GENIUS Act last year. With virtually all circulating stablecoins currently dollar‑denominated, UK authorities aim to grow the market for sterling‑backed tokens and to vigorous‑ly defend jurisdiction against emerging US claims.

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