The Bank of England (BoE) has revealed a forward-looking plan that emphasizes the importance of stablecoins and tokenization as vital components in shaping the future of the UK’s digital financial landscape. Announcing these priorities for 2026 during a speech at the Tokenisation Summit in London, Sasha Mills, the BoE’s executive director for financial market infrastructure, articulated the essential role that regulators will play in fostering a secure and innovative financial ecosystem.
Mills outlined that the BoE will prioritize systemic stablecoins, tokenized collateral, and the Digital Securities Sandbox (DSS) as key innovation areas for the upcoming year. The overarching goal is to establish a holistic environment for digital financial markets, thereby enriching the UK economy.
In her speech, Mills highlighted the transformative potential of stablecoins, stating, “They have the potential to modernize retail and wholesale payments, enabling faster, cheaper, and more efficient transactions.” She emphasized that these digital currencies could provide a viable alternative for individuals and businesses making payments, as well as introduce new functionalities through programmability for the real economy.
The BoE plans to finalize its regulatory framework for systemic stablecoins in collaboration with the Financial Conduct Authority (FCA) by the end of the year. Mills stressed the necessity for these tokens to adhere to the same standards as existing forms of money within the UK economy. Recently, the BoE issued a consultation paper that proposed regulations governing sterling-denominated systemic stablecoins, including rules regarding backing and ownership limits.
A noteworthy aspect of this planned framework includes a contentious proposal to cap stablecoin ownership at £10,000 to £20,000 for individuals and a ceiling of £10 million for businesses, mirroring earlier plans for the proposed digital pound.
Prioritizing Tokenization for Market Clarity
In addition to stablecoins, the BoE has also underscored the significance of tokenization. With practical applications already being piloted in collateral markets, Mills pointed out that tokenization offers notable enhancements, such as improved automation and expedited settlement processes, potentially lowering operating costs for firms while boosting overall market liquidity.
While Mills affirmed that tokenized collateral must meet specific standards to promote financial stability, she cautioned against excessive regulation. Her aim is to avoid mandating specific technologies while providing clarity on how these innovations can operate efficiently under the existing UK regulatory framework, particularly the European Market Infrastructure Regulation (EMIR).
To further instill confidence in the market, the BoE plans to release additional policy details later this year outlining how tokenized collateral can function within established regulations. Given the global nature of finance, Mills highlighted the necessity for international cooperation to ensure the seamless movement of cross-border collateral.
Concerning the Digital Securities Sandbox, Mills detailed the BoE’s efforts in developing an assessment framework to identify stablecoins with high compliance standards for inclusion in the sandbox. While acknowledging that the evolving regulatory landscape may not create seamless alignment between current assessments and future stablecoin regulations, Mills emphasized that this framework aims to guarantee resilience among market participants and facilitate a transition to a more permanent regulatory regime.
As she concluded, Mills proclaimed an ambitious future for the UK’s digital financial environment, asserting that the measures outlined today are essential for ensuring financial stability both domestically and internationally.
