The UK government plans to give the Bank of England a new secondary objective to support innovation in payment systems and emerging forms of digital money. This will include stablecoins as Lo
The UK government plans to give the Bank of England a new secondary objective to support innovation in payment systems and emerging forms of digital money. This will include stablecoins as London looks to keep its financial sector aligned with rapid technological change.
HM Treasury announced the proposal on August 27, saying the new mandate would remain subordinate to the central bank’s primary responsibility for financial stability. The government expects to introduce the change through amendments to the Financial Services and Markets Bill, which is due to return to the House of Lords on September 7 and 9.
JUST IN: The UK government is officially mandating the Bank of England to advance stablecoin and digital money innovation.
This is massive for crypto adoption. When one of the oldest central banks in the world is legally instructed to foster digital currency integration,… pic.twitter.com/WZ4pDZ2E2b
— PaulBarron (@paulbarron) August 27, 2026
The move gives the Bank a clearer statutory role in supporting payment technologies such as tokenization and distributed ledger technology while requiring it to report to Parliament annually on its progress.
The proposal extends an approach already used by the Bank when regulating central counterparties and central securities depositories. Under the new framework, the same innovation objective would apply to systemic payment systems, including those using digital settlement assets such as stablecoins.
That distinction matters as the Bank would not be required to promote a technology if doing so threatened financial stability. Instead, regulators would have to consider whether their rules allow useful technologies and business models to develop without weakening the resilience of the financial system.
The Bank has already been moving in that direction. Its work on tokenized securities, digital settlement and stablecoin regulation is designed to connect new forms of money with existing financial infrastructure rather than create a parallel system.
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Stablecoins could make payments more programmable and potentially reduce friction in settlement, particularly for transactions that currently pass through several intermediaries. Bank of England Governor Andrew Bailey has also pointed to tokenized money as a way to enable programmable payments, including transactions that execute when predefined conditions are met.
But faster settlement does not automatically solve the risks surrounding digital money. A payment system still needs reliable custody, recovery, fraud controls and continuity if users lose access to assets or infrastructure fails.
Jeremy Verba, CEO of CoinCover, shared a commentary with DeFi Planet, saying he welcomes the government’s direction but warned that recovery needs to be considered alongside security.
“As stablecoins and digital money move into the mainstream, the institutions and individuals holding them need confidence that access won’t be lost through a mismanaged key, a departed employee or a technical failure.”
His comment suggests that regulatory support alone will not be enough to make the UK a digital-asset hub. Verba argues that secure recovery and business continuity must be treated as core financial infrastructure, particularly as stablecoins move from crypto-native users to institutions and mainstream payments.
The UK is trying to position itself against jurisdictions that have moved faster to establish rules for digital assets. Reuters reported that the government sees the new objective as part of a broader effort to modernize payments while maintaining the Bank’s financial-stability mandate.
For the industry, the harder question will be how the objective changes actual regulatory decisions. A statutory requirement to consider innovation could make it easier for firms building tokenized payment and settlement infrastructure to engage with regulators, but it does not guarantee lighter rules or faster approvals.
Meanwhile, UK lawmakers have opened a new inquiry into whether banks are unfairly limiting access to financial services for cryptocurrency businesses, as concerns over account closures and payment restrictions continue to grow across the industry.
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The post The U.K. Gives Bank of England New Payments Mandate appeared first on DeFi Planet.
