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On February 25, the Financial Conduct Authority (FCA) announced it had selected four companies to test stablecoin products in its regulatory sandbox: Revolut, Monee Financial Technologies, ReStabilise, and VVTX. The FCA received twenty applications. It accepted four. Testing is underway. The findings will be used to write the UK's final stablecoin rules.
The announcement arrived while the Bank of England was circulating proposals that most legal experts who have read them say would make a commercially viable sterling stablecoin market structurally impossible. The FCA and the Bank of England share regulatory responsibility for stablecoins in the UK. The rules that apply when a stablecoin stays small are the FCA's alone. The rules that kick in when it grows large enough to matter are significantly more onerous — and they are still being written.
The pound as a stablecoin currency
At the time of writing, the total market capitalisation of all sterling-denominated stablecoins in circulation is approximately $12 million. Tether's dollar-denominated USDT has a market cap above $180 billion.
The pound, one of the world's five major reserve currencies, holds a share of the global stablecoin market so small it does not register as a rounding figure.
The four companies selected for the FCA sandbox each represent a different theory of how that changes.
Revolut, Europe's most valuable private fintech company with over 60 million customers, brings existing scale and a payment infrastructure already embedded across the UK. Its stablecoin ambitions have been publicly discussed for more than a year, and its inclusion in the cohort confirms it intends to be among the first issuers when the full UK regime goes live.
Monee Financial Technologies is building settlement infrastructure for digital securities on stablecoin rails. It is simultaneously participating in the Bank of England's Digital Securities Sandbox, making it the only company currently operating inside both programmes at once. That positioning is deliberate: Monee's commercial model only works if stablecoins and tokenised securities infrastructure develop in parallel, which means it has a direct stake in ensuring the two regulatory regimes end up pointing in the same direction.
ReStabilise is a white-label platform. Its proposition is not to issue its own stablecoin but to allow traditional financial institutions to issue pound-denominated stablecoins through its infrastructure without building the underlying technology themselves. If that model works, it means incumbent banks and asset managers could enter the sterling stablecoin market without the technical overhead of building from scratch. The FCA selecting ReStabilise signals an interest in testing whether existing institutions, not just new entrants, can be brought into the stablecoin ecosystem quickly.
VVTX is a layer-1 blockchain that underpins tGBP, currently the UK's largest sterling stablecoin.
Together, the four companies cover payments, wholesale settlement, white-label issuance, and crypto trading. The FCA has, in effect, selected a portfolio of models and is watching all of them simultaneously.
Two institutions, two positions
The FCA's direction is explicit. Matthew Long, its director of payments and digital assets, said when announcing the cohort that the FCA is supporting UK stablecoin issuers to ensure they can be trusted for payments, settlement, and trading.
The sandbox programme is described in official FCA documents as part of its commitment to supporting growth and innovation in UK financial services. The FCA's crypto roadmap sets out a timeline in which the full authorisation regime goes live in October 2027, with the application gateway opening in September 2026. It is a programme designed to produce a market.
The FCA and the Bank of England have agreed on a division of responsibilities, not a division of opinion. Non-systemic stablecoins fall under FCA regulation alone. If a stablecoin grows large enough to be designated systemic by HM Treasury, it moves into a joint regime where the Bank of England's rules apply alongside the FCA's.
The two institutions have committed to publishing a joint approach document in 2026 clarifying how their rules apply in practice. The friction is not between the two regulators. It is in the transition itself. A company can enter the market under FCA rules, build a product, grow a user base, and then find that the moment it succeeds — the moment its stablecoin reaches systemic scale — it crosses into a regime where the reserve requirements and holding caps make the business model it has been building toward structurally unprofitable.
The Bank's current proposals would cap individual stablecoin holdings at £20,000 per coin. Business holdings would be capped at £10 million. Issuers would be required to hold 40% of their reserves in unremunerated accounts at the Bank of England.
Each of those three requirements has drawn serious criticism. The holding caps would limit the scale at which sterling stablecoins can be used. The reserve requirement strikes directly at the business model.
The £10 million problem
Stablecoin issuers earn almost all of their revenue from interest on the short-term Treasury bills they hold in reserve against circulating supply. It is the same model that made money market funds commercially viable.
Requiring 40% of those reserves to sit in zero-yield accounts at the Bank of England eliminates a substantial portion of that revenue without replacing it. Legal analysts have noted that at current interest rates, this requirement alone could make it impossible for a sterling stablecoin issuer to price its product competitively against dollar-denominated alternatives while remaining profitable.
The holding cap matters for a different reason. Coinbase's vice president of international policy, Tom Duff Gordon, gave evidence to the House of Lords Financial Services Regulation Committee recently and was direct on this point. A £10 million cap on business holdings becomes a structural barrier once you consider the scale at which capital markets actually operate. Tokenised gilt settlement, cross-border institutional payments, wholesale collateral management — the use cases that would make a sterling stablecoin meaningfully useful to UK financial markets — require the ability to hold and transfer stablecoins at a scale the proposed cap would not allow. A stablecoin that cannot be held in sufficient size for institutional settlement is not a settlement instrument. It is a consumer product with an institutional branding problem.
The FCA is testing companies that are building institutional infrastructure. The Bank of England is proposing rules that would prevent that infrastructure from functioning at scale — with one notable exception. The holding limits would not apply to stablecoins used for settling wholesale financial market transactions inside the Digital Securities Sandbox. The Bank of England has already acknowledged that wholesale settlement is a legitimate use case and explicitly protected it from the caps it proposes to apply everywhere else.
Monee Financial Technologies, the only company inside both sandboxes simultaneously, sits precisely in that protected space. The question the carve-out raises is why the logic that justifies protecting wholesale settlement does not extend to the broader institutional market.
The dollarisation argument
The Bank of England's underlying concern is rational. Stablecoins backed by pound-denominated assets, if issued at scale without adequate safeguards, create a new channel through which a run on the issuer could transmit stress into sterling money markets. The caps and reserve requirements are designed to limit that exposure. The question is not whether the concern is legitimate. The question is whether the proposed rules address it or simply relocate it.
Dollar-denominated stablecoins are not subject to FCA authorisation or Bank of England reserve requirements. They are available to UK users and businesses today, without restriction. If the rules make sterling stablecoins commercially unviable or cap them below the threshold at which they become useful for institutional operations, the businesses that need stablecoin infrastructure will use USDC or USDT instead. The systemic risk the Bank is trying to manage does not disappear under this outcome. It moves entirely outside UK regulatory visibility, denominated in a currency the Bank of England has no jurisdiction over.
Legal analysts at Travers Smith put this plainly in a published analysis: if it becomes structurally easier to use dollar stablecoins than pound stablecoins in UK markets, the result is the effective dollarisation of the UK's digital financial infrastructure. That is not a theoretical risk. It is the default outcome if sterling stablecoin issuance is made unprofitable.
The US comparison
In July 2025, the United States passed the GENIUS Act, establishing the first federal framework for stablecoin regulation. It created a licensing pathway, set reserve requirements, and established consumer protection standards. It did not impose holding caps on businesses. It did not require issuers to place 40% of reserves in unremunerated accounts.
The US framework was designed to produce a functioning market. The debate in Washington was about how to regulate stablecoins. The debate in London is still partly about whether to allow them to function at scale at all.
The underlying legislation is already enacted. The authorisation regime goes live in October 2027. By that point, the US stablecoin market will have been operating under a federal framework for more than two years. The companies that build stablecoin infrastructure for global institutional use during that period will mostly be building it for a dollar-denominated market, under US rules. Whether UK-based issuers have a meaningful role in that market depends significantly on decisions that have not yet been made.
The Transatlantic Taskforce
As FintechWeekly reported in September 2025, the UK and US established the Transatlantic Taskforce for Markets of the Future during President Trump's state visit to Britain. Co-chaired by HM Treasury and the US Treasury, with participation from the FCA, SEC, CFTC, and Bank of England, it was given a mandate to produce recommendations on digital asset collaboration and cross-border capital markets access.
On January 26, 2026, HM Treasury hosted US Treasury officials and regulators in London for a joint senior-level industry engagement day, with discussions covering capital markets links and digital asset collaboration. The taskforce now aims to report to both finance ministries in summer 2026.
Among the companies that have joined discussions to help shape the taskforce's agenda are Coinbase, Circle, Ripple, Citi, Bank of America, and Barclays. That list is notable for what it signals about the expected output. These are not companies with an interest in a sterling stablecoin market that operates under £10 million business holding caps. They are building global infrastructure, and they are in the room where the recommendations are being written.
The taskforce is focused on three areas: reducing administrative burdens on firms raising capital across borders; identifying short-to-medium-term mechanisms for cooperation on digital assets while regulatory frameworks remain unsettled; and developing long-term proposals for wholesale digital market structures.
On stablecoins specifically, it will examine custody, exchange licensing, stablecoin issuance standards, and the treatment of tokenised instruments — with the aim of moving the FCA and SEC, together with the CFTC and Prudential Regulation Authority, toward common approaches.
Common approaches require comparable rules. A UK framework with £10 million business holding caps is not comparable to a US framework with no such caps. If the taskforce produces reciprocal recognition recommendations — and the GENIUS Act includes a specific provision giving the US Treasury Secretary the power to establish such regimes with other jurisdictions — the UK will need rules that the US considers equivalent. That is a pressure point that is not yet reflected in the Bank of England's proposals.
What comes next
The FCA will publish its policy statements on the full cryptoasset regime this summer, at roughly the same time the Transatlantic Taskforce reports. The Bank of England's proposed caps remain a proposal, not a final position, and the FCA and Bank are still required to publish that joint document.
The four companies in the sandbox are building products, generating data, and feeding findings back to the FCA during a window in which the rules are still being written. That is the mechanism by which sandbox programmes are supposed to work: real-world testing informs final policy. The question is whose data gets weighted, and which institution's assumptions survive contact with commercial reality.
The pound's role in digital finance over the next decade will depend heavily on a question that two UK regulators have not yet resolved between themselves: whether the goal is to produce a market, or to contain one.
Editor's note: We are committed to accuracy. If you spot an error, a missing detail, or have additional information about any of the companies or filings mentioned in this article, please email us at [email protected]. We will review and update promptly.
