A cross-party group of British lawmakers has urged Chancellor Rachel Reeves to intervene in the country’s approach to stablecoin regulation, warning that overly restrictive rules could curb innovation, push investment abroad and diminish London’s role as a leading global financial center.
In a letter dated Dec. 11, 2025, and addressed to the Chancellor, the lawmakers said proposals from the Bank of England risk placing the U.K. at a competitive disadvantage as digital assets become more embedded in global financial infrastructure. The letter was signed by senior MPs and peers, including Sir Gavin Williamson, Viscount Camrose and Baroness Verma.
The group said stablecoins — digital tokens typically pegged to fiat currencies — are rapidly evolving into a foundational component of the digital economy. They argued that the technology is transforming payments and settlement systems by lowering costs, speeding up transactions and broadening access to financial services.
“Stablecoins are reshaping financial infrastructure,” the lawmakers wrote, citing data showing transaction volumes reached $27.6 trillion in 2024, almost 8% more than the combined volume processed by Visa and Mastercard. Citibank forecasts that stablecoin activity could exceed $100 trillion by 2030.
Despite that growth, the lawmakers cautioned that the Bank of England’s draft framework — which limits stablecoin use in wholesale markets, prohibits interest on reserves and caps individual holdings at £20,000 — risks sidelining the U.K. during the next phase of financial innovation.
They argued that such constraints could make pound-backed stablecoins commercially unattractive, encouraging a shift toward dollar-denominated alternatives such as USDC and USDT, which sit largely outside U.K. regulatory oversight.
“The likely outcome would be a migration from pound-backed digital assets to dollar-based ones, creating a two-tier market in which most on-chain activity is denominated and settled in U.S. dollars,” the lawmakers warned.
The appeal comes as the United States advances legislation such as the GENIUS Act to provide clearer rules for digital assets, heightening concerns that policy hesitation in the U.K. could erode London’s long-standing leadership in fintech and capital markets.
The letter concludes by calling for a forward-looking, innovation-friendly stablecoin regime that would attract international investment, support high-value fintech growth and reinforce the U.K.’s position as a global hub for financial innovation.
“We welcome your commitment to making the UK a world-leading destination for digital assets,” the lawmakers wrote. “Now is the moment to act.”
