said<\/a> the future of UK retail payments should support multiple digital forms of money operating together, including tokenized bank deposits, regulated stablecoins, and possibly a retail central bank digital currency.<\/p>\nBreeden said distributed ledger technology could lower payment costs and reduce reliance on intermediaries, while smart contracts may allow automated and conditional payments across retail finance systems.<\/p>\n
\u201cIn retail payments, we want a multi-money system that promotes competition and choice between robust forms of money,\u201d Breeden said. \u201cAlongside traditional bank deposits, people should be able to pay with tokenized bank deposits, regulated stablecoins and, potentially, a retail central bank digital currency.\u201d<\/p>\n
Her remarks arrived days after the Financial Conduct Authority and the Bank of England opened a joint consultation on tokenized wholesale markets. The May 18 consultation asked banks, trading venues, fintech firms, and asset managers to provide feedback on rules governing tokenized securities, collateral, settlement infrastructure, and prudential treatment.<\/p>\n
<\/p>\n
Officials involved in that consultation said firms were increasingly seeking regulatory clarity around tokenized bonds, equities, fund units, and settlement systems as adoption expanded beyond small-scale pilots.<\/p>\n
Stablecoin rules move toward finalization<\/h2>\n
During Tuesday\u2019s speech, Breeden said the Bank of England plans to release draft rules for systemic stablecoins next month before finalizing the framework later this year.<\/p>\n
While discussing financial stability concerns, she said the central bank may temporarily limit the total amount of stablecoins issued during the early stages of adoption. Bank officials have repeatedly argued that safeguards are needed to avoid sudden deposit outflows from commercial banks if digital payment tokens gain traction.<\/p>\n
As previously reported by crypto.news, the Bank of England had already begun reconsidering parts of its stablecoin framework after digital asset companies criticized proposed reserve rules and ownership caps.<\/p>\n
Under the central bank\u2019s November 2025 proposals, individuals would have faced a \u00a320,000 holding limit on a single sterling stablecoin during an initial transition phase, while corporate users would have been capped at roughly $13.5 million. The same proposal also required issuers to keep at least 40% of reserves in non-interest-bearing Bank of England deposits.<\/p>\n
Industry participants told policymakers the restrictions could make pound-backed stablecoins commercially difficult to scale. Marcos Viriato, chief executive and co-founder of Parfin, previously said institutions were more focused on compliance, interoperability, and settlement efficiency than strict reserve structures alone.<\/p>\n
At the same time, Bank of England Governor Andrew Bailey recently warned, according to Reuters, that regulators could face growing international tension over stablecoin oversight as the United States advances legislation such as the GENIUS Act.<\/p>\n
Sandbox participants prepare launches<\/h2>\n
Elsewhere in her speech, Breeden pointed to ongoing work under the Bank-FCA Digital Securities Sandbox, which launched in 2024 and will continue until January 2029.<\/p>\n
The sandbox allows firms to test live issuance, trading, and settlement of tokenized securities using distributed ledger technology inside regulated market infrastructure. Breeden said 16 firms are now preparing to launch services through the program from late 2026 onward.<\/p>\n
Participants include Euroclear, HSBC, and London Stock Exchange Group.<\/p>\n
According to the Bank of England and FCA consultation published earlier this week, regulators are also reviewing how tokenized versions of existing eligible assets could be used as collateral in central counterparties and central bank operations.<\/p>\n
Additional settlement upgrades are also under review. The Bank of England recently proposed extending RTGS and CHAPS operating hours into longer daily windows and weekends, with long-term plans targeting a near 24\/7 settlement infrastructure.<\/p>\n
Breeden added that the prudential treatment of tokenized assets held by UK banks would remain aligned with non-tokenized versions where legal rights and underlying risks remain equivalent.<\/p>\n
Alongside wholesale market reforms, the Bank of England is continuing work on the UK government\u2019s Digital Gilt initiative, which tests tokenized sovereign bonds.<\/p>\n
Later this year, according to Breeden, the central bank is also expected to publish conclusions from the design phase of its digital pound project as UK authorities continue shaping policy around tokenization, stablecoins, and digital settlement infrastructure.<\/p>\n
<\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"
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