The UK Financial Conduct Authority (FCA) has launched a regulatory sandbox program specifically for stablecoin projects, with applications open until January 18, 2026. This initiative aims to foster innovation in the stablecoin sector while ensuring compliance with regulatory standards. A notable inclusion in the sandbox is a large enterprise testing a sterling stablecoin for payment purposes. The sandbox is part of the UK's dual regulatory approach to stablecoins, where the Bank of England oversees systemically important stablecoins, while the FCA handles the regulation of other stablecoins, focusing on conduct and consumer protection. This move aligns with the UK's broader strategy to integrate stablecoins into its financial system, as the UK Debt Management Office considers expanding the government bond market to accommodate stablecoin reserves.