The UK Treasury is inserting a new legal duty into the Bank of England's mandate, requiring the central bank to promote innovation in payments and digital money. The change will be added as an amendment to the Financial Services and Markets Bill and is due to be considered by the House of Lords on 7 and 9 September.
Under the amendment, the Bank of England would face a statutory secondary objective on payment innovation, alongside its existing responsibilities. It would also be required to publish an annual report to Parliament detailing the measures it has taken to meet that objective, giving lawmakers a recurring mechanism to track progress.
Lucy Rigby, commenting on the change, said financial stability would always remain the Bank's primary objective. The framing suggests the Treasury intends the new duty to sit beneath, rather than compete with, the central bank's core stability remit.
Stablecoin regime already softened
The legislative push follows changes the Bank of England had already made to its draft stablecoin framework earlier in June. The central bank dropped its proposed individual and company holding caps for stablecoins, replacing them with a single global issuance limit of £40 billion per systemic stablecoin. It also reduced the share of reserves that stablecoin issuers must hold as non-interest-bearing deposits with the Bank.
Applications from companies seeking to issue a systemic sterling stablecoin are expected to open before the end of the year, giving prospective issuers a concrete timeline for the first time.
The Bank of England has described the assets under its evolving framework as a "new form of money," a characterisation that underlines how differently regulators are approaching stablecoins compared with earlier, more restrictive drafts.
A market still dominated by the dollar
Sasha Mills, Executive Director of the Bank of England, has noted that roughly 99% of circulating stablecoins are denominated in dollars, a figure that frames the scale of the challenge facing any sterling-denominated alternative.
The UK's regulatory recalibration also comes against a backdrop of shifting international frameworks. MiCA has governed stablecoin issuers across the European Union since 2024, while the United States adopted the GENIUS Act in 2025. Both developments have added pressure on UK policymakers to ensure domestic rules do not leave sterling stablecoins at a structural disadvantage.
Whether the new statutory objective translates into faster rulemaking or a broader pipeline of sterling stablecoin issuers will become clearer once the House of Lords considers the amendment in September and the Bank of England opens its application window later this year.
