UK financial institutions have identified stablecoin regulation as a key focus for 2026, emphasizing their role as payment tools rather than investments. This shift impacts redemption timelines, KYC checks, and compliance costs. UK Finance cautioned that stringent regulations on GBP stablecoins might drive issuers overseas. The Financial Conduct Authority (FCA) has initiated a sandbox for non-systemic stablecoins, indicating a move towards practical regulatory implementation.