Revolut will commence trials of a cryptocurrency token pegged to the British pound as part of the Financial Conduct Authority’s (FCA) “sandbox” program. The trial will involve three smaller companies but will exclude participation from major high-street lenders, the FCA announced on Wednesday. The “sandbox” program enables companies to test stablecoin products within a controlled environment. Revolut is a London-based financial technology firm that has experienced rapid growth, becoming one of Europe’s most valuable fintech businesses. The company received a UK banking license with restrictions in 2024 and is awaiting a full license.
Larger financial firms in Britain have generally adopted a more cautious approach to stablecoins compared to their counterparts in Europe and the United States. This caution stems partly from skepticism voiced by the Bank of England (BoE). The Governor of the BoE, Andrew Bailey, has expressed a preference for banks to concentrate on “tokenised” or blockchain-based deposits.
In addition to Revolut, the FCA identified Monee Financial Technologies, ReStabilise, and VVTX as participants in the stablecoin testing initiative. These firms will explore potential applications of stablecoins, including payments, wholesale settlement, and cryptocurrency trading. Revolut plans to begin its stablecoin testing within the current quarter, with a focus on issuing a stablecoin denominated in pounds, according to sources familiar with the matter.
Stablecoin volumes have increased significantly in recent years. While stablecoins are predominantly used in cryptocurrency trading, some banks believe they could enhance the efficiency of mainstream financial services. The BoE advised banks in 2023 that if they intend to issue stablecoins, they should operate under distinct branding to avoid confusion between the safeguards afforded to bank deposits and those of stablecoins.
