The UK Treasury stated that it will amend the Financial Services and Markets Act to assign a task to the Bank of England, requiring it to support innovation in payment systems and digital currencies. This responsibility is subordinate to the goal of financial stability, but it means that the development of stablecoins will be officially incorporated into the central bank's statutory mandate.

Annual reporting required after the amendment

According to the Ministry of Finance, the relevant amendments will be submitted to the House of Lords for review next month. After the bill is passed, the Bank of England will need to report annually to Parliament on the measures it has taken to promote payment innovation and the development of digital finance.

A UK Treasury official Lucy Rigby stated that financial stability will still be the primary responsibility of the Bank of England, but the new objectives will help the UK continue to advance innovation in payments and digital finance. She also mentioned that tokenization and distributed ledger technology could change the way financial markets operate.

Stablecoin rules have been adjusted in June.

Before this arrangement was introduced, the UK crypto industry continuously criticized the Bank of England for its overly conservative attitude towards digital assets. When the Bank of England announced the regulations for pound stablecoins in June this year, it had already made modifications to some of the original requirements.

• Abolish the concept of a maximum holding limit for a single holder
• Changed to set an issuance cap of £40 billion
• Reduce the ratio of interest-free reserve deposits

One of the goals of these changes is to enhance the commercial viability of the stablecoin model in the UK, making it more attractive in competition with other jurisdictions.

Pound sterling stablecoins are still catching up

Deputy Governor of the Bank of England, Sarah Breeden, welcomed the new target, stating that the central bank is working with the government and other regulatory authorities to promote innovation while maintaining payment trust. She said that this statutory target will further support related efforts.

The Executive Director of Financial Market Infrastructure at the Bank of England, Sasha Mills, previously stated that stablecoins are considered a new form of currency and therefore must meet the same robust standards as other forms of currency. The application window for systemic pound sterling stablecoin issuers is expected to open before the end of this year.

Looking at the global market, the competition among stablecoins is accelerating. The European Union has implemented MiCA stablecoin regulations, and the United States has also advanced related legislation. As previously mentioned, about 99% of the currently circulating stablecoins are denominated in US dollars, with pound sterling stablecoins still accounting for a very small share. The UK is attempting to expand this market.