BoE Receives New Mandate to Support Stablecoin Innovation

The Bank of England is set to receive a new mandate that will focus on innovation in digital payments, including stablecoins. This move comes as the UK government aims to support innovation in payment systems and emerging forms of digital money. The new responsibility will extend an existing approach used to regulate central counterparties (CCPs) and central securities depositories (CSDs), which help clear, hold and settle financial assets.

The mandate will cover payment systems that use digital settlement assets such as stablecoins, while financial stability will remain the BoE's primary objective. The government expects to implement the objective through amendments to the Financial Services and Markets Bill, which is scheduled for further debate in the House of Lords on September 7 and 9.

Maksym Sakharov, co-founder and CEO of WeFi, pointed out that the new mandate may depend on how BoE uses its annual reporting requirement. The bank will have to publish an annual account of its innovation efforts in payments and digital money, which could put greater public scrutiny on stablecoin rules.

The UK has been increasing its efforts involving stablecoins, or crypto assets designed to maintain a stable value by tracking assets such as the US dollar. In August, a group participating in the Bank of England's Digital Pound Lab began testing whether a stablecoin and a simulated digital British pound could work together in a cross-border trade payment.