Britain’s stablecoin market could become a significant part of the global payments sector, but the Bank of England must act quickly to lock in the opportunity.
House of Lords pushes for stricter rules
The Lords Financial Services Regulation Committee said the Bank’s draft safeguards would be tougher than existing rules for both digital and traditional payment methods. It highlighted several points: a requirement that 40 % of backing assets remain in non‑interest‑bearing central bank deposits, a £20,000 per‑coin limit for individuals, a £10 million cap for businesses, and restrictions on commercial banks issuing stablecoins.
Committee members argued that these measures could slow the sector, yet they also highlighted the market potential. The United Kingdom currently trails other regions, but the Bank’s proposals indicate a move toward clearer regulation.
Related: Revolut gains Australian banking licence
Europe and the United States set the pace
Across the Channel, the European Union’s Markets in Crypto‑Assets (MiCA) framework will take effect on July 1. Firms without full authorization must cease serving EU customers, and only about 210 of more than 1,200 previously registered entities have completed the transition. The Irish experience shows that once a firm gains MiCA approval and an EEA passport, it can operate across all 30 European states.
In the United States, the GENIUS Act and the pending CLARITY Act have moved stablecoins into recognized payments infrastructure, putting them on par with traditional finance. Meanwhile, Japan’s three largest banks—Mitsubishi UFJ, Sumitomo Mitsui and Mizuho—plan to issue stablecoins this fiscal year, signaling acceptance even in a cash‑heavy economy.
These developments illustrate how clear, cross‑border‑compatible rules can unlock scale for issuers.
Related: Fintechs eye embedded insurance growth
Why sterling‑denominated stablecoins matter
According to a recent analysis, over 99 % of the roughly $320 billion in stablecoins are issued in U.S. dollars, while sterling accounts for less than half a percent of the global market. The gap exists because a credible regulatory framework for pound‑stablecoins is still missing, and the United Kingdom is uniquely positioned to fill it.
Stablecoins could give the UK a new lever in global finance. When market volatility spikes, investors often flee to the dollar as a safe haven. They are not solely controlled by the Federal Reserve, offering an alternative store of value.
Leave a Reply