The Financial Conduct Authority (FCA) has selected Monee Financial Technologies, ReStabilise, Revolut and VVTX to participate in a new stablecoins cohort within its Regulatory Sandbox, with testing due to begin in Q1 2026.
On the FCA’s framing, the cohort is designed to test how stablecoin services operate against proposed UK rules in a controlled environment, with safeguards and feedback from FCA specialists. The regulator says its work will focus primarily on stablecoin issuance, and that the four proposals cover use cases spanning payments, wholesale settlement and crypto trading.For UK policymakers, that sequencing matters. The stablecoin regime has been positioned as part of a broader expansion of the UK’s cryptoasset regulatory perimeter – moving beyond a framework largely centred on financial promotions and anti-money laundering controls toward a fuller authorisation and supervision regime for defined cryptoasset activities. HM Treasury is expected to set the regulated activities in legislation, with FCA rules specifying conduct, prudential and operational requirements.
From Policy Design to Operational Reality
The FCA’s earlier consultation on “qualifying stablecoin” issuance and cryptoasset custody and safeguarding set out the direction of travel: stablecoins referencing fiat currency and intended for payments would be brought within a formal regulatory framework, with specific expectations around issuance controls and safeguarding arrangements, including transparency around backing assets.
That is where the sandbox becomes more than an innovation programme. While the FCA has not published a detailed supervisory test plan, the practical realities of stablecoin issuance are likely to focus attention on issues that policy drafting alone cannot fully resolve: the legal structure of backing assets, the mechanics of redemption under stressed conditions, how reserves are held and reconciled, and how responsibilities are allocated across issuers, custodians, wallet providers and trading venues.
By selecting a cohort described as spanning payments, wholesale settlement and crypto trading, the FCA may also be seeking to observe how stablecoins operate across different market contexts, rather than solely within retail payment flows.
The FCA has not published a point-by-point test framework in its announcement. However, its stated primary focus on issuance, read alongside CP25/14, suggests several implementation themes are likely to be scrutinised.
First, reserve integrity and segregation. Stablecoin frameworks depend on whether backing assets are clearly identified, appropriately safeguarded and transparently managed. A live test environment allows supervisors to assess how issuers evidence those controls in practice.
Second, redemption at par. While consultation papers refer to maintaining stable value, operational performance under liquidity stress is a distinct supervisory question. Sandbox testing may therefore help clarify how the FCA interprets timely redemption expectations in different market conditions.
Third, governance, resilience and operational risk. The FCA’s reference to a “safe environment” implies close supervisory engagement during testing. In practice, that may include observing how firms manage outages, cyber incidents, reconciliation breaks and broader operational disruptions.
Finally, financial crime controls remain relevant. Even where the immediate policy focus is issuance, stablecoin services interact with customer onboarding, wallet controls and transaction monitoring frameworks. The FCA has consistently emphasised that innovation should not weaken existing standards of consumer protection or financial integrity.
The Bank of England Angle
The FCA cohort sits alongside the Bank of England’s work on systemic sterling-denominated stablecoins, where scale and interconnectedness could elevate a stablecoin from a conduct issue into a financial stability and payments infrastructure matter.
In its November 2025 consultation, the Bank proposed that systemic stablecoin issuers hold a minimum proportion of backing assets as unremunerated deposits at the Bank, with the remainder invested in short-dated UK government debt. The Bank also envisages a transition path where firms initially supervised by the FCA could move into a systemic perimeter if usage reaches defined thresholds.
That division of responsibilities matters for firms. It implies that UK stablecoin issuers may face materially different requirements if a product migrates from a non-systemic use case overseen primarily by the FCA into a systemic category overseen by the Bank. The sandbox can therefore be viewed as an early testing ground for issuance models that could later scale into a tighter Bank-led framework.
UK vs EU MiCA
The FCA’s sandbox-led calibration contrasts with the European Union’s approach under the Markets in Crypto-assets Regulation (MiCA), which establishes a directly applicable regime across Member States. MiCA has applied in full since 30 December 2024, with the specific provisions governing asset-referenced tokens (ARTs) and e-money tokens (EMTs) applying from 30 June 2024.
Under MiCA, a stablecoin referencing a single official currency will generally be treated as an e-money token, while tokens referencing a basket of assets fall within the asset-referenced token category. Issuers are subject to authorisation, disclosure obligations including a white paper, and prescriptive requirements on governance, reserve management and ongoing supervision.
MiCA also introduces a “significant” designation for ARTs and EMTs meeting specified criteria, triggering enhanced requirements and a greater supervisory role for the European Banking Authority (EBA).
For firms operating across both jurisdictions, the contrast is structural. The EU regime is already in force, with defined classifications and supervisory processes. The UK remains in a rule-finalisation phase, using sandbox testing to inform its final framework. The operational challenge for cross-border firms will lie in mapping UK “qualifying stablecoin” concepts to MiCA’s ART and EMT categories, aligning reserve and redemption controls where possible, and preparing governance and reporting artefacts capable of satisfying two distinct supervisory approaches.
What to watch in 2026
The FCA has said that findings from the stablecoin cohort will help shape the UK’s final stablecoin rules later in 2026 and has framed the initiative as part of its broader innovation agenda, alongside programmes such as the Digital Securities Sandbox.
The inclusion of Revolut alongside smaller firms is likely to attract attention, given the scale and brand recognition involved. While sandbox participation does not itself confer full authorisation under a future regime, the exercise may provide early insight into how the FCA expects issuance, safeguarding and consumer protection standards to operate in practice once the UK stablecoin framework is finalised.
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