UK’s FCA Launches Stablecoin Sandbox, Revolut Among First to Take Part

The regulator has chosen Monee Financial Technologies, ReStabilise, Revolut, and VVTX to take part in a new stablecoin cohort within its Regulatory Sandbox, where they will trial real-world stablecoin issuance and related services under regulatory supervision.

This initiative represents a pivotal shift in the UK’s approach to digital assets, signaling that regulators want to understand how stablecoins, cryptocurrencies designed to maintain a stable value relative to a fiat currency, might safely fit within the financial system before finalizing comprehensive rules.

The FCA’s Regulatory Sandbox is a controlled environment that allows firms to trial innovative products and services while operating under tailored regulatory safeguards. Established in 2016, the sandbox has since become one of the UK’s flagship innovation policies, letting emerging technologies be tested without the full burden of regulatory compliance that would otherwise apply in a live market.

In this latest cohort, the sandbox will be adapted specifically to support stablecoin-related testing, marking one of the first times stablecoins have been integrated into such a framework in a major developed economy.

The FCA said it received 20 applications to participate in the stablecoin sandbox, indicating strong industry interest in working with regulators to help fine-tune the boundaries of future policy.

The tests are set to begin in the first quarter of 2026, with the regulator planning to use insights gained from the sandbox to help shape final stablecoin regulations later in the year.

The Four Chosen Firms

Each of the four selected companies approaches stablecoins from a different angle, reflecting the wide range of ways digital currencies could be used, from everyday payments to large-scale institutional settlement.

Monee Financial Technologies positions itself at the infrastructure layer, operating across multiple jurisdictions and focusing on stablecoin issuance, cross-border functionality, and settlement systems that could plug into existing financial markets.

ReStabilise is taking a more institutional route. The company aims to establish a UK-based stablecoin issuance and custody platform designed primarily for professional market participants seeking regulated digital asset services.

Revolut, the London-based fintech that has grown into one of Europe’s most prominent neobanks, is proposing a pound-denominated stablecoin pegged one-to-one with sterling. If approved, users would be able to buy, sell, and transfer the token directly through the Revolut app, extending its digital payments model into tokenized money.

VVTX is building a broader hybrid ecosystem, combining traditional financial structures with blockchain infrastructure. Its plan includes launching a UK-based stablecoin alongside a Layer 1 network designed specifically for compliant, regulated payments.

Taken together, these companies represent a range of stablecoin functions, from retail-oriented payment tools to institutional settlement services, offering regulators a broad view of how such assets might be used and regulated.

Why Stablecoins Are a Growing Priority for UK Regulators

Stablecoins have become a central pillar of the evolving cryptocurrency landscape. Unlike volatile tokens such as Bitcoin and Ether, stablecoins are pegged to traditional currencies like the US dollar or British pound, which proponents argue makes them more suitable for everyday payments, cross-border transfers, and integration into broader financial services.

However, concerns around consumer protection, liquidity, reserve backing, and systemic stability have made regulators cautious. Several high-profile failures in the global crypto markets in recent years have underscored the need for careful oversight of stablecoin arrangements. By inviting firms into its sandbox before rolling out the final regulatory regime, the FCA aims to balance innovation with safety, allowing regulators to observe how real products behave in market conditions while firms receive guidance on compliance expectations.

Matthew Long, director of payments and digital assets at the FCA, stated: “We are supporting UK stablecoin issuers to ensure they can be trusted for payments, settlement and trading. It will benefit consumers and financial transactions and help to deliver the FCA's strategy and the Government's National Payments Vision.”

Coinbase CEO Warns of Innovation Risk

As UK regulators move ahead with live stablecoin testing, parts of the crypto industry are already signaling concern about where the broader rulebook may land.

Brian Armstrong, Chief Executive Officer of Coinbase, criticized elements of the UK’s evolving stablecoin framework in a post on X, warning that certain proposals could weaken Britain’s position in the digital economy.

“Stablecoin rules in the UK are being finalized, and are at risk of preventing the UK from being globally competitive in the digital economy,” Armstrong wrote. He pointed specifically to discussions around the Bank of England potentially imposing limits on how much stablecoin individuals and businesses could hold, calling the direction “an innovation blocker.”

Armstrong also encouraged UK residents to sign a petition organized by Stand With Crypto UK, a group advocating for pro-innovation blockchain policy.

The Bank of England has previously explored holding limits in consultation papers focused on financial stability, particularly in relation to deposit substitution and liquidity risks. Those discussions form part of a broader effort to ensure that large-scale stablecoin adoption would not disrupt traditional banking flows.

Armstrong’s remarks highlight a growing divide between regulators focused on systemic safeguards and industry leaders concerned about global competitiveness.

The stablecoin sandbox comes amid a wider regulatory effort in the UK to modernize digital asset oversight. The FCA has been consulting on various aspects of cryptoasset regulation, including custody, market abuse, and prudential standards, and plans to publish formal policy statements in the coming months.

In parallel, the UK government and the Bank of England have been developing their own approaches to digital currency and payment innovation, such as exploring a central bank digital currency (CBDC) and updating laws to treat certain digital assets as property under UK law.

The sandbox initiative may also be seen as part of London’s broader strategy to maintain its standing as a global financial hub amid stiff competition from other jurisdictions, particularly in digital finance.

Testing within the sandbox will continue through the first half of 2026, with regulators expected to synthesize learnings into final stablecoin rules by year-end. Firms participating in the broader crypto regime are expected to seek full regulatory authorization starting in September 2026, ahead of the regime’s scheduled full launch in October 2027.