The UK’s banking watchdog has prioritised British pound-pegged stablecoin payments for growth in 2026, as London seeks to maintain its digital finance leadership. The Financial Conduct Authority (FCA) in the UK made British pound-denominated stablecoin payments a major policy goal for 2026. They also sped up the creation of a special regulatory sandbox for potential issuers before new digital asset rules go into effect.
The watchdog claimed that this step is part of a set of “ambitious new growth measures” for next year that are meant to help UK-issued stablecoins work better for payments. This week, the regulator wrote to Prime Minister Sir Kier Starmer about roughly 50 changes that would make the UK a stronger global financial centre. The FCA pointed to the introduction of UK-issued pound stablecoins in 2026 as a key goal in its overall growth strategy.
Sandbox testing to prepare for new digital asset rules
Companies who wish to issue a pound stablecoin in the UK and want to test their goods should apply to the regulatory sandbox by January 18, 2026. This sandbox is meant to help companies test their stablecoin solutions in a controlled environment before the complete regime goes into force.
The sandbox will be part of the FCA’s current digital sandbox architecture. It will help people test compliance, stability, and consumer protection measures for digital currencies backed by sterling.
The statement comes at a time when those in the crypto business have been asked to give their thoughts on changes to UK investment rules. Earlier this week, the watchdog asked companies that deal with digital assets to give their thoughts on a collection of draft guideline documents that would be used to help shape the legal framework for 2026.
Competition drives innovation in the UK and Channel Islands
Smaller areas within the UK’s financial sector are also actively pursuing their own initiatives. On December 11, the Financial Services Commission (GFSC) of the Bailiwick of Guernsey released a new consultation on its Digital Finance Initiative. It was looking for input on tokenisation, blockchain technology, and stablecoin legislation.
The Digital Finance Initiative is a new set of rules for stablecoins. It says that they must be backed by 100% high-quality liquid assets and defines rules for capital, reporting, and redemption.
The recommendations aim to strike a balance between innovation and robust regulation by establishing clear guidelines for stablecoins, tokenisation, and custody. This approach not only supports the development of new technology but also aligns with Guernsey’s objective of becoming a leading hub for digital assets and sustainable growth.
Policymakers in the UK and Channel Islands seem to want to maintain the area appealing to new financial companies, especially when global competitors like the European Union are moving forward with their own stablecoin systems.