UK financial institutions: The positioning of stablecoin regulation and the integration of payments will become the core issues of cryptocurrency regulation in the UK by 2026

Recent UK financial institutions have reviewed the progress of cryptocurrency regulation in the UK for 2025 and looked ahead to key policy directions for 2026. UK Finance pointed out that over the past year, the UK has engaged in intensive discussions on topics such as stablecoins, cryptocurrency asset trading platforms (CATPs), and market manipulation prevention. The regulatory focus is gradually shifting from "unbacked crypto assets" to stablecoins supported by real-world assets.

UK Finance stated that regulators are increasingly viewing stablecoins as tools with payment and currency attributes, rather than purely investment-type crypto assets. This classification will directly affect redemption timelines, KYC requirements, and compliance costs for issuers. They also warned that if the regulatory burden for pound stablecoins is higher than that for non-pound stablecoins issued overseas, it could prompt issuers to relocate, weakening the UK's control over stablecoins and monetary policy.

Additionally, UK Finance noted that the core challenge for 2026 lies in balancing the encouragement of innovation, consumer protection, and maintaining the resilience of the financial system. This includes rules for the redemption of systemic stablecoins, the design of multi-currency and multi-issuer structures, and the integration of stablecoins with traditional payment channels in payment scenarios. As the UK's Financial Conduct Authority launches a regulatory sandbox for non-systemic stablecoins, the UK is entering the policy implementation phase. Whether the final regulatory framework can balance innovation and competitiveness will determine if London can continue to maintain its status as an international financial center.