On 3 June 2026, the House of Lords Financial Services Regulation Committee (the Committee) published its report, Stablecoins: waiting for regulation (the Report). The report follows an inquiry launched in January 2026 into the growth and proposed regulation of stablecoins in the UK, with a focus on the Bank of England’s (BoE) and the Financial Conduct Authority’s (FCA) regulatory proposals.

Background

The UK’s cryptoasset regulatory regime (including stablecoins) was established by the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026 in February 2026, and is expected to come into force on 25 October 2027. Under the proposed regime, non-systemic stablecoins would be solo-regulated by the FCA, while systemic stablecoins would be subject to dual regulation by both the BoE and the FCA.

Key conclusions and recommendations

The report considers the growth of the use of stablecoins, related opportunities and risks, the UK’s current position on stablecoins and the regulatory frameworks for stablecoins that have been proposed by the BoE and FCA, making a number of observations, including:

  • Risks and benefits of stablecoins: In terms of benefits, use of stablecoins could bring fast and low-cost payment options, greater efficiency in settlement, and innovations such as programmable payments which could complement other forms of money and drive competition in the payments sector. However, they also bring risks which warrant consideration, including potential risks to financial stability, the possible disintermediation of the traditional banking sector, and concerns about consumer protection.
  • Financial crime: There are also concerns about the attractiveness of stablecoins for financial crime but that technology allows for traceability (and with it, the potential to put in place effective monitoring to help tackle financial crime) and therefore it is important that the expansion of stablecoin markets must not create new opportunities for illicit activity to flourish.
  • Flexibility in relation to use cases: The Committee also sets out its view that the role of regulation is not to determine whether or not the use cases will be adopted or what benefits the technology might bring. Rather, regulation must be proportionate and enable innovation, while mitigating risks and safeguarding financial stability, market integrity and consumer protection.
  • Importance of certainty: The Committee also highlights that without regulatory certainty UK risks lagging behind global counterparts, where regulatory regimes are more established and provide clarity for market participants and there is evidence that that the absence of a clear regulatory regime has suppressed stablecoin development and investment in the UK, and that continued uncertainty could compound the dominance of US Dollar-denominated stablecoins.
  • Current proposals: On the proposals themselves, the Committee makes clear that there is much that it supports, for example that the requirement for stablecoin issuers to back stablecoins 1:1 is important, and the proposed backstop lending facility from the Bank is a welcome example of regulation that can support market confidence. However, the Committee also made clear that there are aspects of the proposals that it thinks need further consideration, such as The BoE’s requirement to hold at least 40% of backing assets in unremunerated central bank deposits and proposed redemption requirements, whereby issuers would need to provide holders with the right to redeem stablecoins at par value by the end of the day after the request is made. In addition, the committee suggests that the BoE’s proposals to impose temporary holding limits for systemic stablecoins also need to be reconsidered, as they could unnecessarily inhibit the growth of GBP stablecoins and prove impractical to implement.
  • Uncertainty in relation to dual regulation: There is a lack of clarity on how the transition from the FCA’s regime to dual regulation by both the BoE and the FCA for systemic stablecoins would work and, as a result, issuers are unclear on how this would be determined. HM Treasury has also announced plans to bring stablecoins into the payments regulatory perimeter, but there are no details on which stablecoins this would apply to.
  • Timelines: The Government and regulators must adhere to the timelines they have set out and should carefully consider our recommendations on how aspects of the proposed regulations might be adjusted to bring the certainty and confidence needed for the GBP stablecoin market to develop.

Next steps

The FCA is expected to publish final rules in mid-2026, with the gateway for authorisation applications opening on 30 September 2026. The BoE’s final rules and supervisory approach are expected in the second half of 2026.

The BoE and FCA have committed to publishing a joint approach document in Q2–Q3 2026 clarifying how dual regulation will apply in practice.