The FCA is preparing to bring stablecoins into the mainstream, with plans to launch an expanded regulatory sandbox next year to test policy in the hopes of unlocking faster, more convenient payments.

In a letter to the prime minister, the FCA’s chief executive, Nikhil Rathi, briefly outlined the regulator’s agenda for 2026, which includes finalising digital assets rules and progressing UK-issued sterling stablecoins. 

At the moment, the UK lags behind both North America and the EU in stablecoin regulation and adoption, with nine major European banks from countries including Italy, Belgium, Spain, and economic powerhouse Germany recently joining forces to create a euro-denominated stablecoin. 

This leaves the UK at risk of falling behind in a critical area of financial services technology, a field that British policymakers frequently champion.

The Bank of England has already laid out its own proposed regulatory regime for sterling stablecoins, but until now, the FCA has taken a cautious approach, placing consumer safety above the government’s desire to use tech as a fuel for broad economic growth. 

Speaking last month, the FCA’s executive director for payments and digital finance, David Geale, encapsulated this approach, saying the regulator wants the UK’s emerging stablecoin market “to be one that is well-balanced, enables innovation and is underpinned by integrity and trust”. 

As well as pursuing stablecoin regulation, the FCA said it will deliver a new wave of growth initiatives, focused on more efficient supervision, the digitalisation of financial services, and boosting trade and international competitiveness by deepening US-UK market integration.

In his letter, Rathi said that the FCA will also set the delivery plan for open finance, prioritising SME lending, and aim to speed up IPO applications for scaling firms, with the watchdog already having announced its intention to fast‑track fintechs with temporary licences. 

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Those ambitions follow what the FCA paints as considerable success in meeting the government’s desire to cut red tape and boost growth. 

The regulator said that the “vast majority” of the nearly fifty growth commitments laid out at the start of the year have been met, most notably the acceleration of digital innovation in financial services, after working in partnership with Nvidia to safely test AI models entering the sector. 

“Growth is a cornerstone of our strategy to 2030,” wrote Rathi.

“Rapid technological change means we must focus on outcomes, not prescriptive rules. We will further adapt our supervisory approach, with more tailoring to firms’ size and type, accepting that some things will go wrong and prioritising the most egregious harms.”