Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Revolut has been chosen by the UK financial watchdog as one of four companies to test the use of stablecoins, in a sign of confidence in the fintech despite it still awaiting approval for several regulatory licences.
The Financial Conduct Authority said on Wednesday that it had selected Revolut, Monee Financial Technologies, ReStabilise and VVTX out of 20 companies that applied to test stablecoins in its regulatory “sandbox”.
The companies will trial stablecoin products for use in payments, settlement and crypto trading, as the UK seeks to finalise its rules overseeing stablecoins by the end of the year.
London-headquartered Revolut, which was valued at $75bn in September, is still waiting to become a fully licensed bank in the UK after years in regulatory limbo. In 2024, the fintech secured a UK banking licence after a three-year back-and-forth with the Bank of England. The company remains in a “mobilisation” phase, however, during which its banking division can only hold a maximum of £50,000 in deposits.
Mobilisation usually takes 12 months, according to the BoE’s Prudential Regulation Authority, but Revolut has been in the process for more than 18 months. Revolut and the PRA have said that mobilisation is not a fixed period, and that it can take longer.
The fintech is also yet to receive the green light from UK financial regulators, including the FCA, to provide consumer credit services to its 11mn customers in Britain after applying for approval in 2024.
Revolut has already pushed heavily into crypto, offering digital asset trading and crypto cards for payments. Stablecoins are a type of cryptocurrency that are typically pegged to sovereign currencies. They are mainly used as digital cash to move in and out of crypto tokens.
The FCA said Revolut was exploring a pound-denominated stablecoin that is designed to maintain a one-to-one value with sterling by keeping its backing funds in UK “reserve assets”. The stablecoin would allow customers to “buy, hold, sell and transfer the asset within the Revolut platform and across the crypto ecosystem”.
Revolut said it was “very pleased to have been accepted to join” the FCA’s sandbox. “We are firm believers in driving forward growth and innovation within our home market’s financial services sector, and will begin work this quarter on testing a stablecoin,” it added.
The FCA’s sandbox allows testing of new products in the market with real customers at a small scale and in a controlled environment.
The UK’s stablecoin sandbox is launching as regulators are seeking to finalise rules for the sector by the end of the year in order to compete with places such as the EU and US, which have already passed stablecoin laws.
Crypto companies have complained that UK rules are more restrictive than in many other countries. They are lobbying heavily against BoE proposals to place limits on the amount that individuals and businesses can hold in stablecoins in the UK, and against FCA proposals to impose capital requirements on stablecoin issuers.
“We are supporting UK stablecoin issuers to ensure they can be trusted for payments, settlement and trading,” said Matthew Long, director of payments and digital assets at the FCA, adding this would “benefit consumers and financial transactions” and help to deliver the UK’s objective of upgrading the country’s payments system.
Lucy Rigby, City minister, said this week that the government wanted the UK to become “the global leader in tokenisation” after 16 companies entered the digital securities sandbox run by the BoE and FCA to test innovations based on creating digital tokens for capital market securities, such as bonds and equities.
