UK Treasury: Digital assets could reshape financial markets

Lucy Rigby, Economic Secretary to the Treasury, told delegates at a recent digital assets summit that digital assets could change U.K. financial markets by improving efficiency and speeding capital flows. She said faster execution can free up capital and alter market operations.

The Treasury will work with industry and regulators to plan for those changes and consult as new technologies are introduced.

The King’s Speech included an Enhancing Financial Services Bill the Treasury says will modernize regulation and aim to keep administrative burdens on firms proportionate. Rigby noted the bill contains reforms intended to drive growth in the financial services sector. As digital assets move closer to mainstream finance, asset-management-news.com covers the policy and market shifts shaping institutional adoption.

Stablecoin regulation is a central focus. Rigby pointed to upcoming rules from the Financial Conduct Authority and the Bank of England that will create an authorization route for stablecoin issuers, with a portal for applications scheduled to open later this year. The FCA ran a regulatory sandbox earlier this year that included four firms testing a pound-denominated stablecoin.

Bank of England officials indicated they will treat stablecoins as a new form of money. The bank’s executive director for financial market infrastructure stated it plans to accept applications by the end of the year from parties seeking to issue a systemic stablecoin for widely used payments in the U.K.

The Treasury will publish a consultation inviting feedback from the payments sector on a single framework for traditional and tokenized payments. The consultation will cover stablecoins and tokenized deposits and will consider the role of technologies such as AI agents in payments.

Rigby urged minimizing regulatory frictions between the U.K. and U.S. and suggested some form of recognition or alignment between the two regulatory regimes may be needed to support firms operating on both sides of the Atlantic.

Rigby described digital assets as offering efficiency gains and faster execution and warned they have the potential for a “complete transformation” of market structures. She added, “I’m pretty clear that’s what the future looks like,” and called for careful, proportionate rules developed with industry and regulators.