UK financial institutions: Stablecoin regulatory positioning and payment integration will be core issues in UK crypto regulation in 2026.

A recent report by UK financial institutions outlined the progress of UK crypto regulation in 2025 and provided a key policy outlook for 2026. UK Finance noted that the past year has seen intensive discussions in the UK regarding stablecoins, crypto asset trading platforms (CATPs), and the prevention of market manipulation. The regulatory focus is gradually shifting from "unanchored crypto assets" to stablecoins backed by real-world assets. UK Finance stated that regulators are increasingly viewing stablecoins as tools with payment and monetary attributes, rather than simply investment-type crypto assets. This classification will directly impact redemption timelines, KYC requirements, and issuer compliance costs. It also cautioned that if the regulatory burden on sterling stablecoins is higher than that on non-sterling stablecoins issued overseas, it could induce issuers to relocate, weakening the UK's control over stablecoins and monetary policy. Furthermore, UK Finance pointed out that the core challenge in 2026 lies in striking a balance between encouraging innovation, protecting consumers, and maintaining the resilience of the financial system. This includes systemic stablecoin redemption rules, multi-currency and multi-issuance structure design, and the integration of stablecoins with traditional payment methods in payment scenarios. With the UK Financial Conduct Authority launching 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 whether London can maintain its status as an international financial center. (Crowdfund Insider)