🇬🇧 (3 June) UK House of Lords - Stablecoins: Awaiting Regulatory Clarity

🔴 The global stablecoin market remains dominated by USD-denominated stablecoins, particularly Tether and Circle, while the UK stablecoin market is still in its early development phase.
🔴 Stablecoin usage remains heavily concentrated in cryptoasset markets and cross-border payments, although the sector is evolving rapidly and expanding into broader financial use cases.
🔴 Stablecoins have the potential to deliver faster, lower-cost payment solutions, improve settlement efficiency, and enable programmable payments. However, they also introduce risks related to financial stability, banking-sector disintermediation, and consumer protection.
🔴 Regulation must remain proportionate and innovation-friendly, while effectively mitigating risks. The framework should also be flexible and responsive enough to support future innovation and emerging use cases.
🔴 The absence of a clear regulatory regime has limited stablecoin development and investment in the UK. Continued uncertainty could further strengthen the dominance of USD-denominated stablecoins and delay the growth of a competitive GBP stablecoin market.
🔴 Key concerns with the current proposals:
⚪ 40% backing in unremunerated central bank deposits could negatively affect commercial viability and reduce international competitiveness.
⚪ Redemption requirements may create significant operational burdens for stablecoin issuers.
⚪ Temporary holding limits could restrict adoption and slow the development of GBP-denominated stablecoins.
⏰ The UK is falling behind. Government and regulators must adhere to clear timelines and provide the certainty, confidence, and regulatory clarity needed for the GBP stablecoin market to develop.
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