The Financial Conduct Authority, the UK’s primary financial regulator, announced Wednesday that enabling local firms to experiment with stablecoin payments will be a top priority for 2026.
In a letter to Prime Minister Keir Starmer, FCA Chief Executive Nikhil Rathi outlined the regulator’s digital innovation strategy for the coming year. The FCA’s 2026 goals include finalizing digital asset regulations and advancing UK-issued sterling stablecoins.
“Our reforms help the UK maintain its global competitive edge in our world-leading wholesale markets, attract international investment, and lead on innovation in financial services,” Rathi said in the press release.
The FCA is currently working with the Bank of England to develop a comprehensive set of regulations encompassing stablecoins, trading platforms, lending, staking, and custody, which is expected to be implemented in 2026.
Contrary to the fast regulatory developments in the U.S., the UK has adopted a phased approach to crypto regulation, aiming to balance innovation and consumer protection. However, this cautious stance has drawn criticism. Consensys, the firm behind MetaMask, previously told The Block that the FCA’s application of existing financial rules has caused the country to lose its position as a crypto hub to the U.S.
Still, regulatory efforts appear to have gained recent momentum. The FCA recently opened a regulatory sandbox for local stablecoin issuers looking to test out their stablecoin solutions. The sandbox has set an application deadline of Jan. 18 for participating companies.
Earlier this year, the country passed the Property (Digital Assets etc.) Act 2025, where digital assets are now a legally recognized form of property.
“Rapid technological change means we must focus on outcomes, not prescriptive rules,” Rathi wrote in the letter. “We will further adapt our supervisory approach, with more tailoring to firms’ size and type, accepting some things will go wrong and prioritising the most egregious harms.”
© 2025 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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