UK financial regulator asks stablecoin firms to launch in its ‘sandbox’ and help shape regulation

Core Insights - The UK Financial Conduct Authority (FCA) has launched a special cohort within its Regulatory Sandbox for firms issuing blockchain-based stablecoins pegged to currencies like the British pound and US dollar, marking a significant step towards regulating the crypto industry [1][7] - The initiative aims to support agile policymaking and industry development, allowing firms to provide practical feedback to the regulator [2] - The FCA's move comes amid criticism of the UK's slow regulatory response compared to the EU and US, which have implemented more proactive regulations for digital assets [5][4] Regulatory Environment - The UK crypto asset market remains largely unregulated, with the Bank of England proposing to cap individual stablecoin holdings between £10,000 and £20,000 and business holdings to £10 million, which has faced criticism from industry insiders and legislators [3][4] - The FCA's recent consultations and plans to support the tokenization of the UK's nearly $19 trillion asset management industry indicate a shift towards more structured regulation [2] Industry Response - Industry representatives have expressed concerns that the UK's regulatory approach may deter crypto businesses from establishing operations in the country, highlighting the need for a more favorable regulatory environment [4][5] - A major firm has already been accepted into the FCA's stablecoin cohort and is preparing to test a British pound stablecoin in the coming months, signaling potential growth in the sector [7]