- Revolut and three other firms are joining the FCA’s stablecoin sandbox.
- The regulator’s test environment will focus mostly on issuing stablecoins.
- The UK is ramping up its crypto ambitions on various fronts.
Revolut and three other firms will join the Financial Conduct Authority’s stablecoin sandbox, the regulator said.
The sandbox, an ongoing project for the regulator since last year, will focus on key uses under real-world conditions, including crypto trading and payments.
Alongside Revolut, Monee Financial Technologies, ReStabilise, and VVTX will participate.
Monee is a digital lending platform also involved in the Bank of England’s digital securities sandbox. ReStabilise is a white-label stablecoin service designed to help more traditional outfits issue their own stablecoins. VVTX is a layer-1 blockchain underpinning the UK’s largest sterling stablecoin, tGBP.
“We are supporting UK stablecoin issuers to ensure they can be trusted for payments, settlement and trading,” Matthew Long, the FCA’s director of payments and digital assets, said in a statement.
“It will benefit consumers and financial transactions and help to deliver the FCA’s strategy and the Government’s National Payments Vision.”
UK leans in
The collective value of sterling-based stablecoins is worth just under $5 million, according to DefiLlama data.
By comparison, stablecoins denominated in the US dollar are worth over $307 billion.
The British government, however, is keen to close that gap.
In December, the FCA announced that stablecoins used for payments would be a key priority for the new year.
The move is part of a wider push for growth from the left-leaning Labour government.
“We will continue to embrace a bolder risk appetite to support growth, while maintaining our commitment to protect consumers and ensure market integrity,” Nikhil Rathi, the FCA’s chief executive, wrote in a note to British Prime Minister Keir Starmer.
Meanwhile, the Bank of England is finalising rules for its supervisory regime for stablecoins.
Alpha Bank said that cryptocurrencies pegged to fiat currencies could offer more efficient payment solutions than traditional payment rails.
Avoiding pitfalls
Despite the vast lead that dollar-backed stablecoins, such as Tether’s USDT and Circle’s USDC, have over their British counterparts, some have argued that the tactical approach to stablecoins means avoiding the pitfalls that have slowed US policymakers.
Though landmark stablecoin legislation in the US passed quickly last summer, regulators, officials, and legislators are still hammering out several key details.
The biggest sticking point is whether the yield generated by the assets backing stablecoins should be passed on to holders.
With sterling stablecoins still embryonic, industry insiders hope this gridlock can be avoided.
“Stablecoins there have scaled quickly, but under fragmented oversight and unclear accountability,” Javed Khattak, co-founder and CEO of London-based digital identity provider Cheqd, told DL News.
“UK regulators and industry are likely keen to avoid repeating that pattern by setting clear expectations early, while the market is still small enough to shape responsibly.”
Liam Kelly is DL News’ Berlin-based DeFi correspondent. Have a tip? Get in touch at liam@dlnews.com.
