The House of Lords Financial Services Regulation Committee has opened an inquiry into proposed stablecoin rules in the United Kingdom, seeking public input on plans put forward by the Bank of England (BoE) and the Financial Conduct Authority (FCA).
The inquiry will examine how stablecoins could affect traditional financial services such as banking and payments, as well as the opportunities and risks created by their growing use in the UK, the committee said in a Thursday statement.
Lawmakers said the review will assess whether the regulatory frameworks proposed by the BoE and the FCA provide “measured and proportionate responses” to developments in the stablecoin market, according to Baroness Noakes, chair of the committee.
Written submissions from industry participants, experts and members of the public are open until March 11. The committee is scheduled to take oral evidence at a public hearing on Wednesday.
Related: Former SEC lawyer responds to Ripple CLARITY Act concerns in public submission
Bank of England to finalize systemic stablecoin rules by end of 2026
The inquiry comes as UK authorities continue to refine their approach to stablecoin oversight.
The Bank of England has said advancing stablecoin regulation will be among its top priorities for 2026, alongside work on tokenized collateral and its Digital Securities Sandbox.
Sasha Mills, executive director of financial market infrastructure at the BoE, said the central bank is working jointly with the FCA on a regime for so-called systemic stablecoins, aiming to ensure they meet the same standards as existing forms of money used in the UK economy.
“Our regime proposes to provide systemic stablecoins with a deposit account at the Bank of England while also considering putting in place a liquidity facility to provide a backstop for stablecoin issuers,” she said, speaking at the Tokenisation Summit on Thursday, setting a deadline at the end of the year.
“We aim to finalise the regime for systemic stablecoins, working side-by-side with the FCA, by the end of this year.”
According to the BoE, “systemic stablecoins” are fiat-linked stablecoins widely used in payment activity in the UK, including pound sterling-denominated tokens used in retail or corporate payments, and therefore could pose risks to financial stability. They are required to be fully backed with at least 40% of reserves held in deposits at the BoE.
Mills also said the growing stablecoin use could reduce bank deposits in the country and lead to a reduction in credit provided to the “real economy.”
Related: Moldova moves to regulate crypto under EU-style MiCA rules
The inquiry follows recent regulatory developments from the FCA, which has released a final consultation setting out 10 proposals covering crypto markets. The regulator is expected to conclude that process in March, with full implementation targeted for October 2027.
Under the UK’s approach, crypto regulations would be centralized under the FCA, which is both the country’s securities and commodities regulator.
Related: Stablecoins are real threat to bank deposits, says Standard Chartered
In contrast, the US’s incoming market structure framework, the CLARITY Act, which includes provisions touching payment stablecoins, seeks to create a clear delineation between the jurisdictions of the Securities and Exchange Commission and the Commodity Futures Trading Commission, in relation to crypto assets.
Magazine: How crypto laws changed in 2025 — and how they’ll change in 2026
