A cross-party coalition of UK lawmakers has called on Chancellor Rachel Reeves to step in and ensure the UK’s regulatory framework for stablecoins does not stifle innovation or drive capital overseas, warning that the Bank of England’s current proposals risk undermining the City of London’s appeal as a global financial hub.
In a letter dated 11 December 2025, addressed to the chancellor and signed by prominent MPs and peers including Sir Gavin Williamson, Viscount Camrose and Baroness Verma, the group said stablecoins, or digital tokens linked to an external reference such as traditional fiat currencies, are fast becoming a pillar of the digital economy.
These tokens are reshaping financial transactions by lowering costs, speeding up settlements and promoting financial inclusion, they claimed.
“Stablecoins are reshaping financial infrastructure,” the lawmakers wrote, noting that transactions reached $27.6 trillion by 2024, surpassing the combined activity of Visa and Mastercard by nearly 8%. Citibank, they cited, expects that figure to exceed $100 trillion by 2030.
However, they are concerned that the Bank of England’s draft guidelines, which limit the use of stablecoins in wholesale markets, ban interest on reserves and caps of GBP 20,000, risk leaving the country on the sidelines of the impending wave of financial innovation.
Such limits, they argued, could make pound-backed stablecoins “unattractive”, driving investors towards dollar-pegged alternatives such as USDC and USDT, both of which are outside UK regulatory reach.
“The result would be a flight from pound-backed digital assets to dollar-based ones, creating a two-tiered market where most on-chain activity is denominated and settled in US dollars,” the lawmakers warned.
Their intervention comes as the US moves aggressively through its GENIUS Act to bring regulatory clarity to digital assets, raising fears that London’s once undisputed leadership in fintech and capital markets could be eroded by political indecision at home.
The letter concluded by calling for a forward-looking stablecoin framework that would secure international investment, support high-value fintech growth and strengthen the UK’s position as a global hub for innovation.
secure international investment, support high-value fintech growth and strengthen
“We welcome your commitment to ‘make the UK a world-leading destination for digital assets’. Now is the time to deliver on this ambition. We urge you to act,” the letter said.
Read: IMF Marks Stablecoins as Source of Risk to Emerging Markets, Experts Say We’re Not There Yet
