The UK Treasury has announced its most ambitious push to date to integrate digital money into the mainstream financial system. During London Fintech Week, Economic Secretary to the Treasury Lucy Rigby outlined plans to create a single, coherent regulatory framework that will cover traditional payment services, fiat-backed stablecoins, and tokenized bank deposits. This move aims to bring these digital assets under the same regulatory umbrella as existing payment services, rather than treating them as a parallel crypto niche.
The emerging model proposes that stablecoins used as payment instruments will be governed by a new issuance regime within the broader Financial Services and Markets Act cryptoasset framework. Furthermore, systemic pound-denominated stablecoins will be subject to joint supervision by the Bank of England and the Financial Conduct Authority (FCA). In parallel, tokenized deposits—commercial bank money issued on blockchain—are being treated as a complementary pillar, preserving the existing two-tier banking system while enabling on-chain functionality.
To support this integration, the Treasury is backing the initiative with £1 million in fresh funding earmarked for fintech pilot projects. These experiments will explore the use of stablecoins and tokenized deposits in payments, treasury management, and cross-border flows. The Bank of England is also expanding its Digital Securities Sandbox to include these assets as settlement instruments, allowing regulators to observe real-world use cases before finalizing a permanent regime.
The government has named former FCA veteran Chris Woolard as the digital markets champion for its Wholesale Financial Markets Digital Strategy. Woolard will support efforts to drive the adoption of tokenized digital assets, emphasizing that collaboration between the public and private sectors is key to maintaining the UK's global competitiveness. The Treasury also plans to introduce legislation to reduce administrative burdens for companies seeking to offer stablecoin payment services, with the broader crypto regulatory framework expected to take effect in 2027.
This coordinated approach, involving the Treasury, Bank of England, and FCA, represents a strategic bid to position the UK as a preferred jurisdiction for regulated digital payment assets in the post-Brexit landscape. Policy analysts note that the UK is advancing a "third path" that leverages tokenized deposits as programmable extensions of traditional bank money, distinct from debates pitting central bank digital currencies against private stablecoins.
