The central bank gains a secondary duty to support payments and stablecoin innovation, sitting below its financial stability objective.
HM Treasury said on 27 August it will give the Bank of England a new secondary objective to support innovation in payment systems and digital money, including stablecoins.
The government will make the change through amendments to the Financial Services and Markets Bill, which will next be debated in the House of Lords on 7 and 9 September, with the Bank also set to report to Parliament each year on how it is advancing the objective.
The reform forms part of wider financial services changes tied to the Chancellor’s growth plans.
What the Bank’s stablecoin objective does
The objective forms a secondary responsibility below the Bank’s primary duty to protect UK financial stability. The Bank already holds a secondary innovation objective for central counterparties and central securities depositories, introduced under the Financial Services and Markets Act 2023.
This latest reform extends its approach to systemic payment systems, including those using digital settlement assets such as stablecoins. HM Treasury said the duty will not require the Bank to support innovation where doing so would undermine financial stability.
City Minister Lucy Rigby said tokenisation and distributed ledger technology “have the potential to transform financial markets across the globe”. She added financial stability will remain the Bank’s primary objective while the secondary duty supports innovation in payments and digital finance.
Sarah Breeden, Deputy Governor for Financial Stability, also welcomed the announcement and said it would further support the Bank’s work to maintain trust and drive innovation in UK payments.
This latest reform comes after the Bank published its initial stablecoin framework in June. It set a £40bn issuance cap for each systemic sterling stablecoin and dropped earlier proposed limits on individual holdings after industry pushback. The Bank is currently consulting on its draft Code of Practice until 22 September and plans to finalise it by the end of 2026.
The systemic regime is expected to let regulated stablecoins operate from 2027, with non-systemic stablecoins staying under Financial Conduct Authority (FCA) rules.
Industry response to BoE innovation support for stablecoins
Mark Fairless, CEO of ClearBank, tells Payment Expert the mandate is a marker of government intent. “This announcement shows the Government’s desire for the UK to be at the forefront of the digital assets revolution. It’s encouraging to see the Bank of England given a clear mandate to support the development of sterling denominated stablecoins, while continuing to prioritise the financial stability and trust that underpin its role.
“London’s ability to combine regulation and innovation has made it a global financial hub and this is a step towards applying the same principles to maintain its position for the future.”
Pratiksha Pathak, SVP, Head of Payments at RedCompass Labs, says to Payment Expert: “Creating the right conditions for innovation will be important if the UK wants to remain competitive as stablecoins develop.
“For banks, moving beyond experimentation and making stablecoin payments work in practice will be the challenge. They will need to do so within existing payments infrastructure, liquidity management, compliance and reconciliation processes,” she adds.
“If the UK gets that balance right, regulation can support the transition while maintaining the resilience and safeguards the financial system depends on, helping to enable more efficient cross-border payments and always-on settlement while giving banks greater confidence to move from pilots towards practical use.”
Emma Banymandhub, CEO at The Payments Association, adds: “The Payments Association welcomes the Government’s decision to give the Bank of England a new objective to support innovation in payment systems and emerging forms of digital money.
“This means UK regulation will keep pace with technological change and support growth in the financial services sector, and the Bank of England can work as navigators, not backseat drivers – a welcome change we have been a huge advocate for.
“The UK needs to reassert itself as a global leader in the future of digital finance, building an internationally competitive digital currency ecosystem. It isn’t a new realisation that stablecoins have moved well past speculative novelty and are fast becoming a foundational layer of global payments infrastructure.
“If done right, this will create an attractive jurisdiction for digital assets to drive UK growth, ensuring we keep pace with bold moves in the EU, US and Asia.
“Shaping financial services policy, this is real progress towards a workable and internationally competitive stablecoin framework.”
The move follows expanding stablecoin regimes in other major markets. The US enacted the GENIUS Act in July 2025, the EU’s MiCA regime took full effect in December 2024, and Hong Kong’s Stablecoins Ordinance came into force in August 2025.
The Treasury’s wording must pass Parliament before the objective becomes law.
