A cross-party coalition of British MPs has called on Chancellor of the Exchequer Rachel Reeves to step in to ensure that the UK’s regulatory framework for stablecoins does not stifle innovation or drive capital flows overseas, warning that the Bank of England’s current proposals could undermine the City of London’s appeal as a global financial centre.
Stablecoins, or digital tokens pegged to external references such as traditional fiat currencies, are rapidly becoming the backbone of the digital economy, the group said in a letter dated 11 December 2025 to the Chancellor of the Exchequer, signed by prominent MPs and peers including Sir Gavin Williamson, Viscount Camrose and Baroness Verma.
They believe these tokens are reshaping financial transactions by reducing costs, accelerating settlement and promoting financial inclusion.
“Stablecoins are reshaping financial infrastructure,” the lawmakers wrote, noting that transaction volume will reach $27.6 trillion in 2024, nearly 8% higher than the combined transactions of Visa and Mastercard. Citing Citibank, they predict the figure could exceed $100 trillion by 2030.
However, they worry that the Bank of England’s draft framework, which restricts the use of stablecoins in wholesale markets, prohibits interest charges on reserves and caps holdings at £20,000, could leave the country on the margins of a coming wave of financial innovation.
They argue that such restrictions could make sterling-backed stablecoins “unattractive,” prompting investors to turn to U.S. dollar-pegged alternatives such as USDC and USDT, both of which are outside UK regulatory scope.
“The result will be a shift from sterling-backed digital assets to USD-based digital assets, creating a two-tier market in which most on-chain activity is denominated and settled in USD,” the lawmakers warned.
Their intervention comes as the United States moves to create regulatory clarity on digital assets through its GENIUS Act, raising concerns that London’s once undisputed leadership in fintech and capital markets could be undermined by domestic policy indecision.
The letter concludes by calling for a forward-looking stablecoin framework that will secure international investment, support high-value fintech growth and cement the UK’s position as a global hub for innovation.
Securing international investment to support high-value fintech growth and strengthening
“We welcome your commitment to ‘make the UK the world’s leading destination for digital assets’. Now is the time to realize this ambition. We urge you to intervene,” the letter said.
read: IMF labels stablecoins a source of risk for emerging markets, experts say we’re not there yet
