2025 has been a busy year of regulatory development in the UK, resulting in many hours of discussion at UK Finance’s Stablecoins & Cryptoassets Working Group, dissecting a huge amount of detailed rules; from those looking to help tackle cases of market manipulation and abuse, to stablecoin issuers managing a tokens’ backing assets. Now is a good opportunity to take a step back and review the key questions that have shaped 2025 crypto policy, but also those that will undoubtedly be important in 2026. 

2025 review 

What exactly is a stablecoin? 
Cryptoasset like instruments, backed by real world assets, predominately central bank treasuries or/and short-term debt securities, which at present are used mostly to support the on/off ramping of unbacked cryptoassets. Yet, things get more complicated when you think about how stablecoins can be used beyond this, either as a payment function or store of value. For the most part, stablecoins have been seen as specified investment-type instruments much like unbacked cryptoassets, so – consumers will invest in a stablecoin token and make (or lose) money via a cryptoasset exchange (or, ‘Cryptoasset Trading Platform (CATPs)’). However, the regulators are treating stablecoins increasingly like money/payment-like instruments due to their bearer quality and reduced volatility compared to unbacked cryptoassets. This classification exercise may seem like semantics, but it's a really important part of building regulatory requirements that are targeted to how stablecoins will actually be used. 

The age-old task of policymakers getting the balance right between enabling innovation, getting the protections right for consumers, merchants and third parties/intermediaries and ensuring resilience of financial services has been an important task this year. We’ve seen this with requirements on CATPs; acting as vital intermediaries between retail/institutional cryptoasset investors, and issuers/custodians. It has been a tight balancing act between ensuring investors have the right information and protections they need to invest confidently in a token, while making it commercially viable for a CATP to operate. A proposed requirement for systemic stablecoin issuers to process redeemed funds in 24 hours has faced this level of scrutiny in respect of tokens being exchanged on secondary markets, making it challenging to meet in respect of Know Your Customer (KYC) obligations. 

Particularly in respect of HM Treasury’s draft Cryptoassets Order, firms are still analysing how stablecoins denominated in Sterling (GBP) and issued in the UK will be treated compared to non-Sterling (it’s worth noting Tether’s USDT and Circle’s USDC take up 93 per cent of global stablecoin market capitalisation) stablecoins issued outside of the UK. To put it simply: will it be easier and less costly, in terms of regulatory obligations, to issue an overseas stablecoin into the UK compared to one based in the UK? This could create a scenario where stablecoin issuers move overseas to issue a stablecoin not backed by GBP derived assets, particularly Bank of England reserves, resulting in non-Sterling stablecoins being widely used in the UK, raising lots of complex questions around how policymakers’ can continue to have control over both risk in financial services, and monetary policy more generally. 

The last question is, will London keep its title as an International Financial Centre in this new digital assets system? It is fair to say the UK regulatory framework will land somewhere pragmatically in between the US (i.e. a government/political-led strategy, seeing stablecoins as a payment-instrument, interest-bearing restriction) and European Union (EU) (i.e. requirements on ‘significant’/’systemic’ stablecoins, detailed redemption requirements, disclosures), or; a design that builds resilience and tackles risks while enabling innovation. 

2026: a look ahead 

While the Labour government has expressed its enthusiasm for enabling UK digital assets, as we raised in our response to HM Treasury’s ‘Cryptoassets Order’ in the Spring, there is a gap between the political direction of the regulatory framework, and the developing detailed requirements. Multi-issuance and multi-currency stablecoins are examples of this. Permitting these stablecoins requires a clear political steer in relation to how much risk this government is willing to take. 

Creating a level-playing field between FinTechs, Payment Service Providers, and banks/Financial Market Infrastructures will be an important challenge to unpack in 2026, particularly in respect of the Bank of England’s recently published Sterling Systemic Stablecoins consultation. Or, in other words, will it be harder for established financial institutions to partake in activities (such as custody) supporting a systemic stablecoin compared to crypto-specific FinTechs? It's crucial the UK gets this right. 

Returning to payments, the industry is awaiting the publication of HM Treasury and the Bank of England’s Payments Forward Plan, which will aim to map the sequenced priorities for retail and wholesale payments infrastructure. How will stablecoin payments connect to traditional payment rails to enable things like stablecoin payments at the point of sale, but also connect to the Plan’s wider priorities and objectives? 2026 will be an important year for these questions. 

Much of the framework’s design is based on regulating individual crypto tokens, yet; as I raised earlier, much of the promise of digital assets lies in how regulated firms may start to integrate crypto into existing financial instruments, from ETFs/ETNs, ISAs to collateral. Thinking in this way will help to move crypto from being an individual asset class to something that supports the real economy. How this can be enabled via the regulatory framework will be an important topic of engagement. 

And finally, to finish by moving away from regulation. What has shaped the recent ‘AI bubble’ debate in recent weeks is that market dynamics for new emerging technologies rarely sit still, with many ‘winners’ turning quickly into ‘losers’ as new entrants take the crown. This reality will likely be the case for stablecoins – or, as the end-user, technical, business model, and regulatory implications for how stablecoins will end up being used is likely to evolve and change in the next 5-10 years at a quite significant pace. To be blunt: there is still a lot to play for. 

Next steps 

With the Financial Conduct Authority (FCA) announcing its non-systemic stablecoins issuance regulatory sandbox last month, policymakers now look towards publishing the final policy statements (including the final Cryptoassets Order text) across the framework while authorisation submissions start. Yet, as examined in this blog – there is still a number of big policy questions that require further thinking. We look forward to working with our members, stakeholders, and policymakers in 2026 before the final rules go-live.