By Phoebe Seers and Elizabeth Howcroft
LONDON, Feb 25 (Reuters) – Britain’s Revolut will start testing a crypto token pegged to the British pound, in a trial with three small companies but no big high-street lenders, the Financial Conduct Authority said on Wednesday.
The trial will take place as part of the financial regulator’s “sandbox” programme, which allows firms to trial stablecoin products in controlled conditions, it said.
Britain’s larger financial firms have generally been more cautious in their approach to stablecoins – a type of cryptocurrency pegged to a fiat currency – than European and U.S. counterparts, partly because of scepticism from the Bank of England.
BoE Governor Andrew Bailey has expressed a preference for banks to focus on “tokenised”, or blockchain-based, deposits instead.
WORK ON TESTING TO START THIS QUARTER, REVOLUT SAYS
Along with Revolut, the regulator said that Monee Financial Technologies, ReStabilise and VVTX would be part of the testing, looking at possible use cases including payments, wholesale settlement and crypto trading.
London-based Revolut has grown rapidly in recent years and is Europe’s most valuable financial technology business.
The company, which received a UK banking licence with restrictions in 2024 but is still waiting for a full licence, said it would begin work “this quarter” on testing a stablecoin.
A source familiar with the matter said the work would focus on the issuance of a pound-denominated stablecoin.
STABLECOIN VOLUMES SURGED
Stablecoin volumes have surged in recent years, led by El Salvador-based Tether, which says it has more than $180 billion of its dollar-pegged token in circulation.
In October, AFME said European stablecoins, including tokens based on the euro, British pound, and Swiss franc, represent less than 0.2% of the global market.
Stablecoins are mostly used in crypto trading, but some banks say they could make mainstream financial services more efficient.
The BoE told banks in 2023 that if they want to issue stablecoins, they should do so under separate branding to avoid confusion between the protections offered for bank deposits and those for stablecoins.
(Reporting by Phoebe Seers and Elizabeth Howcroft; Editing by Tommy Reggiori Wilkes and Jan Harvey)
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