The UK cross-party parliamentary alliance recently wrote to Chancellor Rachel Reeves, urging the government to revise the current stablecoin regulation draft to avoid stifling innovation and preventing capital outflows. The letter was signed by several prominent MPs and nobles, including Sir Gavin Williamson, Lord Camrose, and Baroness Wilma, directly criticizing the Bank of England’s current regulatory proposals as “potentially overly restrictive.”
The MPs emphasized that stablecoins have become a vital infrastructure of the digital economy, playing an increasingly critical role in the global financial system. In 2024, stablecoin trading volume reached $27.6 trillion, surpassing the combined volume of Visa and Mastercard transactions, and is expected to break through $100 trillion by 2030. They believe stablecoins are reshaping the way payments, settlements, and cross-border finance operate, and are also the core driver of future financial inclusion and efficiency improvements.
However, the draft regulatory framework introduced by the Bank of England is viewed by the MPs as a significant risk to the UK’s competitiveness. The draft includes banning interest on reserves, restricting stablecoin use in wholesale markets, and setting a cap of £20,000 per user. The MPs warned that these restrictions would seriously undermine the appeal of pound-stablecoins, forcing market capital to shift toward US dollar stablecoins (such as USDT and USDC), creating a “dollar-dominated on-chain dual market” outside the UK regulatory scope.
Meanwhile, the US is advancing the GENIUS Act to create clearer regulations for digital assets, while the UK’s slower policy pace could weaken London’s position as a global fintech hub. The letter pointed out that if the UK fails to develop a more forward-looking stablecoin framework in time, it will miss the opportunity to lead the next wave of financial innovation.
The MPs called on the government to act swiftly to establish a friendly and investment-friendly regulatory system to ensure the UK maintains its fintech advantage. “We welcome your commitment to making the UK a leading destination for digital assets. Now is the time to turn that commitment into action,” the letter stated. (CoinDesk)
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