FCA opens Regulatory Sandbox stablecoins cohort

Stablecoins are moving from a niche cryptoasset concept toward a potentially systemic component of modern financial services. Against that backdrop, the Financial Conduct Authority has launched a dedicated stablecoins cohort within its Regulatory Sandbox, inviting prospective United Kingdom stablecoin issuers to apply to test their products and services in a controlled setting while the United Kingdom regulatory regime continues to develop.

The rationale for a stablecoins-focused cohort is explicitly linked to their growing importance in cryptoasset markets and their potential role in enabling new financial services innovations for both retail and wholesale customers. Stablecoins may be used across a wide range of activities, including payments and settlement flows, trading and liquidity management, and products that resemble familiar financial services functions. Because these use cases can touch consumers directly, and because stablecoin models depend heavily on how backing assets are managed and how redemption operates in practice, regulators have a strong interest in ensuring that market development is paired with credible safeguards and clear operational expectations.

This cohort is positioned as a practical opportunity for firms to test stablecoin propositions under the United Kingdom’s evolving approach to regulation. It also complements other innovation initiatives, including the Digital Securities Sandbox, suggesting an effort to modernise the regulatory toolkit while maintaining standards for market integrity and consumer outcomes. Importantly, the cohort is framed not as a fast-track approval route but as a structured environment in which firms can test, learn, and engage constructively with regulators.

Who is the cohort designed for? The focus is on firms planning to issue a stablecoin in the United Kingdom under the upcoming regime, and on companies that are sufficiently ready to begin testing and to provide meaningful input that could inform policy development. This readiness element matters. The Sandbox is not a general learning programme; it is a testing programme. Firms are expected to have a clear proposition and the operational capability to conduct a test that yields insight into risks, controls, and consumer experience.

The stated benefits of participation are practical and policy-relevant. Firms can test stablecoin solutions in a controlled environment, either using live consumers in the market or using firm data. They can also contribute insights that may help shape future rules, while receiving guidance and feedback from Innovation Case Officers and on the application itself. There is also a visibility dimension: successful applicants will be listed publicly on the regulator’s website, although acceptance is explicitly not an endorsement. That distinction is important for market communications and marketing governance. Firms should treat participation as evidence of regulatory engagement and structured testing, not as a signal of regulatory approval of the product.

The cohort has clear timelines. Applications opened on 26 November 2025, with a deadline of 18 January 2026 at 11:59 pm, and testing is expected to begin in the first quarter of 2026. The length of a test will vary depending on factors such as the firm’s readiness, whether the test involves live customers, the specific use case, and the business model and capabilities of the firm. This flexible approach recognises that stablecoin models can differ substantially in design and risk profile, and that the testing needs for a retail-facing wallet use case may not match those for a wholesale or institutional arrangement.

From a compliance and authorisation perspective, the application process also signals practical prerequisites. Firms intending to test with live customers will need to be registered for anti-money laundering purposes. Firms planning to offer fiat payment services will need permissions under the Payment Services Regulations. The cohort is also open to tests involving other groups or using firm data, which may be relevant for firms that are not yet ready for live customer exposure but can still produce meaningful evidence on operational controls, redemption processes, backing asset management, and user experience.

Application quality expectations are made explicit: firms should demonstrate readiness to begin testing, have appropriate permissions and resources, provide a well-aligned test plan, and be as detailed as possible. The test plan is expected to align with the consultation on stablecoin issuance, reflecting policy proposals around redemption, managing backing assets, and offering the stablecoin. The assessment process involves review by an Innovation Case Officer, who may request additional information, followed by a decision. There is no formal appeals process, but unsuccessful applicants will receive feedback.

Overall, the stablecoins cohort represents a structured regulatory engagement pathway designed to accelerate responsible experimentation. For the market, it provides a clearer route for stablecoin issuers to test under supervisory visibility. For policymakers, it creates a channel to gather practical evidence on how stablecoin business models operate under real constraints. For consumers and the wider financial system, it is an early indicator that stablecoin adoption is being approached through a combination of innovation support, risk-based testing, and the development of clearer future rules.

Source: Regulatory Sandbox: stablecoins cohort | FCA