Bank of England to Accept Systemic Stablecoin Applications in 2026

The Bank of England has officially recognized stablecoins as a "new form of money," marking a significant shift in the United Kingdom’s approach to digital asset integration. Sasha Mills, the Executive Director at the Bank of England, recently confirmed that the central bank will begin accepting applications for systemic stablecoins by the end of the year. This move signifies the UK’s intent to formalize the role of private digital currencies within its financial infrastructure, provided they adhere to strict regulatory standards intended to preserve national financial stability.

A Neutral Regulatory Framework for Digital Assets

The central bank’s strategy focuses on maintaining a level playing field between emerging financial technologies. According to Sasha Mills, the Bank of England does not intend to "pick winners" in the competition between tokenized deposits and stablecoins. Instead, the focus remains on ensuring that any asset used for widespread payments is sufficiently backed and resilient. The regulatory oversight will be split between two primary entities:

• The Bank of England will oversee "systemic stablecoins"—those with the potential to impact the broader economy due to their scale of use in payments.
• The Financial Conduct Authority (FCA) will regulate other stablecoin variants that do not meet the systemic threshold.
• The Prudential Regulation Authority will continue to monitor traditional banking entities exploring tokenization.

Global Context and Pound-Denominated Assets

A critical point of discussion remains the current dominance of the US dollar in the digital asset space. Mills noted that 99% of global stablecoins are currently priced in USD. However, Matthew Long, Director of Payments and Digital Assets at the FCA, suggested there is significant potential for pound sterling-denominated stablecoins to serve the domestic market. The UK is currently synchronizing its regulatory timeline with the United States to ensure international alignment on compliance standards for digital assets.

"We see stablecoins as a new form of money, and we are preparing the groundwork to ensure they can be used safely within our financial system." — Sasha Mills, Bank of England Executive Director.

The implementation of these regulations is part of a broader effort to modernize the UK's financial sector. By establishing a clear application process, the Bank of England aims to address risks associated with liquidity and credit while fostering innovation in the blockchain and distributed ledger technology (DLT) sectors. As the end-of-year deadline approaches, the global crypto industry will be watching to see which issuers apply for systemic status and how these assets will interface with traditional sterling-based banking.