The UK Financial Conduct Authority (FCA) has identified sterling-pegged stablecoins as a key focus for 2026, according to a statement from FCA CEO Nikhil Rathi to Prime Minister Keir Starmer. The FCA plans to finalize digital asset regulations and advance the development of UK-issued sterling stablecoins. Additionally, the FCA has introduced a sandbox initiative for stablecoin companies, with applications open until January 18. In parallel, the Bank of England is working on rules for payment stablecoins, aiming to improve payment speed and efficiency. The FCA is also advocating for the migration of traditional assets to blockchain technology and the tokenization of funds, signaling a broader push towards digital financial innovation in the UK.