The Bank of England's policy is bullish! Clearly supporting stablecoins and tokenized deposits, moving away from the overly strict regulatory image?

The UK Financial Conduct Authority and the Bank of England jointly released an industry consultation document, seeking market opinions on the regulatory framework for tokenized wholesale financial markets, accelerating the integration of digital assets into mainstream finance.

UK Regulators Fully Promote Tokenized Finance

The UK Financial Conduct Authority (FCA) and the Bank of England (BoE) recently published an industry consultation document, officially soliciting market feedback on the regulation of "tokenized wholesale financial markets," indicating that the UK is speeding up the formal inclusion of digital assets into the mainstream financial system.

According to the official statement, the UK government has prioritized tokenization as a key element of its digital strategy for financial markets, especially optimistic about its potential in post-trade clearing, collateral management, and asset circulation. The consultation targets banks, investment firms, asset managers, trading platforms, fintech companies, and securities infrastructure providers, with a response deadline of July 3.

Regulators also announced that later this year they will publish a more comprehensive cross-sector roadmap and response document, and plan to hold multiple industry workshops, aiming to establish clearer legal and regulatory frameworks to assist companies in investing in and expanding tokenized financial infrastructure.

This move by the UK also reflects a shift in global regulatory directions. Previously, regulation focused heavily on cryptocurrency speculation and retail investor risks; now, the focus is gradually shifting toward institutional applications, including digital clearing systems, tokenized bonds, stocks, and collateral management infrastructure.

Bank of England Supports Stablecoins and Tokenized Deposits

Sarah Breeden, Deputy Governor of the Bank of England, stated during a speech at London City Week 2026 that, in the future, the UK retail payment system should establish a "multi-currency coexistence" framework, allowing traditional bank deposits, tokenized deposits, regulated stablecoins, and potentially digital pounds (CBDC) to operate together.

Image source: Reuters, Sarah Breeden, Deputy Governor of the Bank of England

Breeden pointed out that shared ledger technology and smart contracts could make payments faster, cheaper, and reduce intermediaries. She believes that through programmable financial infrastructure, the efficiency of payments, clearing, and collateral management will see significant improvements.

She stated, "In addition to traditional bank deposits, in the future, people should also be able to use tokenized bank deposits, regulated stablecoins, and potentially retail central bank digital currencies for payments."

The Bank of England also revealed that it will publish a draft regulation for systemic stablecoins next month, with final rules expected by the end of this year. The authorities are currently reassessing previously controversial restrictions. In the past, the Bank proposed that individuals could hold no more than 20k pounds in a single stablecoin, and companies up to 10 million pounds, which drew strong industry opposition. Many industry players believe such restrictions could weaken the UK’s attractiveness in the global digital finance race.

• Related news: Very strict! UK proposes limits on stablecoin holdings, industry rebuffs: violates decentralization principles

Industry Criticizes Overly Strict Regulation, UK Reassesses Policy Direction

The UK crypto industry has repeatedly criticized that the stablecoin regulations proposed by the Bank of England are among the most conservative in major global financial markets. According to early drafts, stablecoin issuers would need to hold at least 40% of reserves in interest-free central bank accounts, which many believe would significantly constrain business models and profit margins.

• Katie Harries, Policy Lead at Coinbase UK, stated that compared to holding limits, "total issuance caps" might be a more feasible approach, but she also emphasized that no major jurisdiction globally is considering managing stablecoins by restricting their scale as the UK is contemplating.
• Simon Jennings, Executive Director of the UK Cryptoasset Business Council, argued that regulation should be based on actual supervisory data and risk indicators, rather than pre-emptively imposing excessive restrictions before the market matures.

Breeden also disclosed that the Bank of England is considering replacing individual holding limits with an "issuance total cap" to lower costs and reduce the potential impact on financial stability and lending capacity caused by large flows of bank deposits into stablecoins.

• Related news: Bank of England plans to relax stablecoin regulation! Deputy Governor admits: early proposals were too conservative

Digital Securities Sandbox to Become UK’s Core Testing Platform

In addition to stablecoin policies, the UK is accelerating the development of tokenized financial market infrastructure. The UK regulators are currently promoting the "Digital Securities Sandbox" (DSS), a system that allows companies to test issuance, trading, and clearing of tokenized securities in a real regulatory environment. Sixteen firms have entered the first phase, including HSBC, Euroclear, and the London Stock Exchange Group, with services expected to roll out gradually by the end of 2026.

• Related news: Major UK financial reform! Officially launching the "Digital Securities Sandbox," what’s next?

The Bank of England states that future regulation of tokenized assets will align with that of traditional financial assets. As long as legal rights and risk profiles are equivalent, the prudential supervision of banks holding tokenized assets will be the same as for non-tokenized assets.

Additionally, the Bank plans to extend settlement times for the RTGS and CHAPS payment systems, gradually moving toward near 24-hour operation, and may even include weekend settlement mechanisms in the future. The official expects that by 2027, direct integration with tokenized asset networks could be achieved, further enhancing the UK’s position in the global digital finance landscape.

Further Reading
UK regulation loosens! FCA releases stablecoin sandbox list, Revolut plans to launch GBP stablecoin?
UK Digital Securities Sandbox launches! How distributed ledgers are changing the financial game?

Global Financial System Enters Tokenization Competition Stage

In recent years, the US, Singapore, Hong Kong, Japan, and the EU have all accelerated the development of stablecoins and tokenized financial infrastructure. Especially after the Trump administration’s renewed embrace of the crypto industry, the UK has also been prompted to reassess whether its regulatory policies are competitive internationally.

The Bank of England’s recent shift in stance reflects a rapid change in how central banks worldwide view blockchain and digital assets. Regulators are now more focused on enabling innovation within frameworks that maintain financial stability and market trust, while promoting next-generation financial infrastructure development.

Breeden concluded her speech by stating that the UK’s current mission is for the government, regulators, and industry to collaborate effectively to build a practical tokenized financial ecosystem.

As stablecoins, tokenized deposits, and on-chain payment infrastructure mature, the global financial market is entering a new phase of digital financial competition.