UK Aligns Stablecoin Strategy With U.S. Pace
The UK is preparing to unveil its long-awaited regulatory framework for stablecoins, with the Bank of England confirming that the rollout will move in parallel with the United States. The initiative is part of a transatlantic task group, intended to protect domestic jobs, support economic growth, and ensure regulatory alignment with the U.S. across emerging digital financial infrastructure. Sarah Breeden, Deputy Governor of the Bank of England, announced that the consultation on stablecoin legislation will be published on November 10, marking a pivotal step in shaping the UK’s role in global digital asset oversight.
Breeden clarified that the new rules will initially apply only to “systemic” stablecoins, which the central bank believes could become widely used in payments. Other stablecoins, she emphasized, will continue to fall under the Financial Conduct Authority’s existing regulatory structure, a lighter-touch approach compared to the Bank’s direct oversight.
Temporary Limits Aim to Manage Stability Risks
Breeden revealed that the proposal will include temporary usage restrictions: £20,000 ($26,000) per individual and £10 million per enterprise. These measures are designed to guard against rapid shifts of bank deposits into stablecoins, a particular vulnerability for the UK given its mortgage market’s reliance on traditional banking liquidity.
She noted that “being effective is just as important as being first” emphasizing that regulatory precision is more important than speed. Breeden acknowledged that the U.S. remains ahead in crypto product development and innovation, stressing that the UK must focus on execution rather than racing to lead headlines.
Broader Push to Modernize the UK's Digital Financial Landscape
The timing of the Bank of England’s announcement reflects growing pressure on the UK to keep pace with U.S. regulatory clarity, especially as global competition for digital asset leadership intensifies. On October 9, the government disclosed plans to appoint a “digital markets champion”, a role designed to drive adoption of blockchain and distributed ledger technologies in wholesale financial infrastructure.
Additionally, the Dematerialization Market Action Taskforce will oversee the transition away from paper-based share certificates, signaling a move toward fully digitized securities markets.
UK FCA Lifts Retail Ban on Crypto ETNs
A major shift came on October 8, when the Financial Conduct Authority (FCA) ended its four-year retail ban on cryptocurrency exchange-traded notes (ETNs). This change means that crypto ETNs are now available to everyday investors, provided the products are listed on FCA-recognized exchanges.
He argued that maintaining competitive market momentum is essential, particularly as the U.S. and Singapore advance rapidly.
FCA leadership emphasized that market understanding of crypto ETNs has improved since the ban was introduced. However, ETNs are still not listed on the London Stock Exchange, and retail access to crypto derivatives remains prohibited due to consumer risk concerns.
Brett Hillis, partner at Reed Smith, argued that crypto ETNs remain “the safest and most prudent method for investing in bitcoin” while maintaining that regulators are unlikely to ease access to crypto derivatives in the foreseeable future.
A Race for Regulatory Credibility
The UK’s approach reflects a balancing act: encouraging innovation and investment while maintaining strong consumer protection standards. With stablecoin legislation, ETN access, and digital market modernization advancing in parallel, the UK is positioning itself to remain competitive-but its ability to match U.S. pace and influence will be the true test of policy impact.
