The UK Treasury wants stablecoins and tokenized deposits regulated like payment services, backing the push with new rules, BoE coordination and £1m for fintech pilots.

The UK Treasury used London Fintech Week to signal its most ambitious push yet to bring digital money inside the country’s mainstream payments perimeter. According to reporting on recent Treasury evidence sessions and policy briefings, published on Tuesday, ministers now want fiat‑backed stablecoins and tokenized bank deposits regulated under the same umbrella as existing payment services, rather than treated as a parallel crypto niche.

London targets post‑Brexit payments edge

Economic Secretary to the Treasury Lucy Rigby told the House of Lords Financial Services Regulation Committee that including stablecoins directly in payments rules would allow the UK to design “a payments framework that facilitates both traditional payments and tokenized payments in a coherent and comprehensive way.” That stance effectively revives a 2022–23 plan—first floated under the previous government—to amend the Payment Services Regulations so that sterling‑backed stablecoins used in UK payment chains are explicitly captured by law.

Under the emerging model, stablecoins used as payment instruments will sit within an issuance regime that ties into the broader Financial Services and Markets Act cryptoasset framework, while systemic pound‑denominated stablecoins will fall under joint Bank of England and FCA supervision. In parallel, tokenized deposits—commercial bank money issued on blockchain rails—are being treated as a complementary pillar, giving banks a path to on‑chain money that preserves the existing two‑tier system.

Bank of England officials have already started expanding the Digital Securities Sandbox to include both tokenized deposits and regulated stablecoins as settlement assets, allowing regulators to observe real‑world use cases before locking in a permanent regime. The Treasury’s new integration plan builds on that work, with around £1 million in fresh funding earmarked for fintech experiments that use these instruments in payments, treasury management, and cross‑border flows.

Policy analysts note that, while global debates often pit central bank digital currencies against private stablecoins, the UK is quietly advancing a “third path” that leans heavily on tokenized deposits as programmable, 24/7 extensions of traditional bank money. As one recent industry brief put it, tokenized deposits are “not a new form of money” but a new infrastructure layer, designed to keep credit creation and deposit guarantees inside the banking system even as settlement moves on‑chain.

Taken together, the Treasury’s unified framework, the Bank of England’s systemic stablecoin consultation, and the FCA’s 2026 focus on stablecoin payments suggest a coordinated bid to make the UK a preferred jurisdiction for regulated digital payment assets in the post‑Brexit landscape. If regulators can balance prudential safeguards with genuine room for experimentation, London’s fintech sector may end up setting templates other financial hubs copy rather than compete against.

• Weekly Purchase: 101,627 ETH worth approximately $230 million
• Record Context: Largest weekly haul since December 15, 2025
• Total Holdings: 4.97 million ETH across the treasury
• Total Assets: $12.9 billion in crypto and cash combined
• Staking Revenue: 3.33 million ETH staked, generating ~$221 million annualized
• Consecutive Weeks of Accelerated Buying: Four straight weeks of increased pace

The CBOE Volatility Index (VIX), a preferred Wall Street metric to measure investor sentiment and market risk, dropped by over 45% in under a month. For Bitcoin (BTC), this could be a significant bullish signal.

Key takeaways:

• Bitcoin may rise toward $82,700 if VIX keeps underperforming.

• BTC’s upside outlook gets a boost from Strategy’s BTC buying spree.

Weakening VIX hints at BTC rising to $82,700

Often called Wall Street’s “fear gauge,” the VIX tracks how much volatility traders expect in the S&P 500 index over the next 30 days.

When the index rises, it usually signals rising stress and risk aversion across markets. When it falls, it suggests investors are becoming more comfortable owning riskier assets such as stocks and crypto.

History suggests that a VIX drop of 40% or more is bullish for Bitcoin.

For instance, BTC rallied approximately 40% during April 2025–May 2025, with its gains aligning with the VIX’s 70% dip.

Similarly, a 46% VIX drop during the October–November 2025 period coincided with a 12% BTC gain.

Even the recent 42%–47% VIX decline has coincided with an 8%–9% BTC price rebound, improving the bullish backdrop for Bitcoin in the coming days.

BTC’s next upside target appears to be around the 200-day exponential moving average (200-day EMA, the blue line) at around $82,700 by early May.

What happens to Bitcoin if VIX starts rising?

A rising VIX is typically bearish for risk assets like Bitcoin. However, that correlation broke briefly in March, according to a chart highlighted by wealth management firm Swissblock.

BTC and VIX rose in tandem during the US–Iran escalation in March. In comparison, the broader risk market, including US equities, underperformed.

One potential catalyst behind Bitcoin’s resilience may have been Strategy’s aggressive BTC buying, which has absorbed the equivalent to nearly 30 weeks of new coin supply since March.

Related: Saylor teases ‘bigger’ BTC buy days after floating semi-monthly dividends

“Bitcoin has already shown inherent strength in a very complex environment”, Swissblock said, adding:

“Do not be surprised if it starts to outperform on its own again.”

Nonetheless, any slowdown in Strategy’s buying could weaken Bitcoin’s support during periods of rising VIX, increasing the risk of downside.

Multiple analyses suggest BTC may drop below $50,000 in 2026.