LONDON – Britain’s Revolut will begin testing a crypto token pegged to the British pound in a trial with three small businesses, but no major high street lenders will be participating, the Financial Conduct Authority said on Wednesday. It said the trial will be conducted as part of the financial regulator’s “sandbox” program, which allows companies to trial stablecoin products under controlled conditions.
Large British financial firms are generally more cautious in their approach to stablecoins (a type of virtual currency pegged to fiat currency) than their European and American counterparts, in part due to skepticism from the Bank of England. BoE Governor Andrew Bailey has expressed a preference for banks to focus on “tokenised” or blockchain-based deposits instead.
Revolt says it will begin testing this quarter.
The regulator said that in addition to Revolut, Money Financial Technologies, ReStabilise and VVTX will also participate in the test, which will consider possible use cases such as payments, wholesale payments and crypto trading. London-based Revolut has grown rapidly in recent years and is Europe’s most valuable financial technology business.
The company received a limited UK banking license in 2024 but is still waiting for a full license and said it would begin testing the stablecoin “this quarter”.
Sources said the work will focus on issuing a pound-denominated stablecoin.
Stablecoin volume increases rapidly
Stablecoin trading volume has skyrocketed in recent years, with El Salvador-based Tether announcing it has more than $180 billion of dollar-pegged tokens in circulation. AFME said in October that European stablecoins, which include tokens based on the euro, British pound and Swiss franc, account for less than 0.2% of the global market.
Although stablecoins are primarily used in cryptocurrency transactions, some banks say they have the potential to make mainstream financial services more efficient.
The BoE told banks in 2023 that if they wanted to issue stablecoins, they should do so under a different brand to avoid confusion between the protections offered to bank deposits and stablecoins.
(Reporting by Phoebe Sears and Elizabeth Howcroft; Editing by Tommy Reggioli Wilkes and Jean Harvey)
