The House of Lords has told the Bank of England and the FCA to keep to their timetable on stablecoin regulation, arguing that further delay will hand the digital payments race to Washington and Brussels, and shut British SMEs out of a fast-moving market.
Britain’s stablecoin moment has, in the view of peers, finally arrived, and the regulators must not fluff it. In a report published this week under the unsentimental title Stablecoins: waiting for regulation, the cross-party House of Lords Financial Services Regulation Committee has urged the Bank of England, the Financial Conduct Authority and HM Treasury to stick rigidly to their published timetable, warning that any slippage will entrench the dominance of dollar-backed tokens and leave UK challenger banks, payment firms and small businesses on the wrong side of an emerging global infrastructure.
The committee, chaired by the Conservative peer Baroness Noakes DBE, was unsparing in its assessment of how far the UK has fallen behind. “The global stablecoin market is dominated by US dollar stablecoins and evolved to serve cryptoasset trading,” she said. “New uses for stablecoins are emerging and regulators globally are setting up regulatory regimes. The UK is lagging behind compared with the US and the EU but is now moving in the right direction.” The message to Threadneedle Street and Stratford was, in effect: get on with it.
A sterling stablecoin, a digital token pegged one-for-one to the pound and backed by safe, liquid assets, is presented in the report as a genuine opportunity for the City and for the wider economy. Peers point to faster, cheaper settlement, programmable payments that could automate routine SME treasury tasks, and a broader stablecoin services ecosystem that could generate fee income for British banks, custodians and fintechs. With the UK’s existing depth in capital markets and a mature regulatory culture, a credible GBP token could find a willing audience well beyond the crypto trading floor.
But the committee is equally candid about the risks. Stablecoins, peers warn, carry implications for financial stability, the disintermediation of traditional deposit-takers and the protection of consumers who may not fully understand what sits behind a digital token. The use of stablecoins for illicit finance, particularly via unhosted, self-custody wallets, is highlighted as a serious global concern that British policymakers cannot wish away.
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