UK House of Lords backs mandatory digital asset strategy

The UK’s upper chamber just told the Treasury to stop dragging its feet on crypto. The House of Lords has passed an amendment requiring HM Treasury to develop a formal strategy covering crypto assets, stablecoins, tokenized securities, and the broader plumbing of digital financial infrastructure.

The move, attached to the Financial Services and Markets Bill, signals that the Lords view the UK’s current positioning in the global crypto race as insufficient, with peers openly citing concerns about falling behind the US and EU.

What the amendment actually does

The amendment compels the Treasury to produce a cohesive strategy rather than continuing to regulate digital assets in a piecemeal fashion. The scope is broad: crypto assets, stablecoins, tokenized securities, and digital financial infrastructure all fall under its umbrella.

The Financial Services Regulation Committee published a report in June 2026 that laid the groundwork for this push. That report urged regulators to ease up on stablecoins, specifically calling for a reconsideration of the initial 40% unremunerated central bank deposit requirement that critics argued would make UK-based stablecoin issuance economically unviable.

The Bank of England listened, at least partially. On September 10, 2026, the BoE issued a policy statement refining its approach to systemic stablecoins. The new backing structure requires 70% in short-term UK government debt and 30% in unremunerated BoE deposits. It also introduced a temporary issuance cap of £40 billion per systemic stablecoin.

The bigger regulatory picture

The FCA is set to oversee a new comprehensive framework for crypto asset activities, expected to take effect from 2027. A statutory instrument laying the legal groundwork for that framework was anticipated in December 2025.

Peers have been explicit about their motivation: competitiveness. Multiple Lords have pointed to the regulatory frameworks emerging in the US and EU as benchmarks the UK should be measuring itself against. The EU’s Markets in Crypto-Assets Regulation (MiCA) has been live since mid-2024. Meanwhile, the US has been rapidly evolving its own approach, with stablecoin legislation and market structure bills advancing through Congress.

What the stablecoin rules mean in practice

The BoE’s revised backing requirements represent a pragmatic compromise. The original 40% central bank deposit requirement would have forced stablecoin issuers to park a huge chunk of their reserves in non-interest-bearing accounts at the Bank of England. The new 70/30 split, with the majority going into short-term gilts, gives issuers access to yield on the larger portion of their backing assets. The remaining 30% in unremunerated deposits provides the BoE with a direct lever for monetary policy transmission and crisis management.

The £40 billion issuance cap per stablecoin adds a systemic risk backstop, giving regulators a hard limit while they assess the real-world effects of these instruments on money markets and payment systems.

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