The Lords are right: the UK’s stablecoin opportunity is real, but it won’t wait

The global stablecoin industry is watching the UK this month as the House of Lords encourages the Bank of England (BoE) to publish productive rules around stablecoins.

The Lords Financial Services Regulation Committee declared that the BoE’s proposed safeguards would impose tougher conditions on stablecoins than those that currently govern other forms of digital or traditional payments. The committee took issue with the suggested requirement for 40% of backing assets to sit in non-interest-bearing form (specifically unremunerated central bank deposits), a £20,000 per-coin individual holding limit plus a £10 million holding limit for businesses, and curbs on commercial banks issuing stablecoins.

Currently, the UK lags behind other jurisdictions when it comes to stablecoins, but the BoE is moving in the right direction, albeit a little slowly. By scrutinizing the BoE’s proposals, the Lords have also highlighted the market opportunity.

Realising this opportunity means establishing regulation as soon as possible. With the right rules in place, adoption will follow.

The regulatory picture has moved from “it’s coming” to “it’s here”

While the UK has been in a cycle of drafting and redrafting, stablecoins have become recognised payments infrastructure. Across the Channel in Europe, the existing regime is already being revised to keep pace with demand.

The Markets in Crypto-Assets (MiCA) regulation deadline approaches on July 1. After that date, any crypto firms serving EU clients without full authorization must cease operations. Of more than 1,200 firms that held legacy national registrations, only around 210 had converted to full authorization. Prepared stablecoin payment platforms will be distinguished from the unprepared.

We have seen this shift first-hand. Our Irish entity went through MiCA and Payment Institution authorisation with the Central Bank of Ireland, and the process was demanding – for good reason. But once complete and combined with EEA passporting approval the door was open to all 30 EEA states. That is what a credible framework delivers: a rigorous but clear path to operating across borders at scale. Give UK firms that certainty, and they will build with confidence.

Outside Europe, the GENIUS Act in the US (with the CLARITY Act now before the full Senate) has enabled stablecoins to move from a regulatory system in development into recognised payments infrastructure, in the same realm as traditional finance. Further afield, three of Japan’s biggest banks, Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group and Mizuho Financial Group, have just announced they will jointly issue stablecoins within the current fiscal year. That is in an economy where cash is still popular. When banks of that scale commit, in a market that conservative, it’s clear stablecoins are becoming mainstream payments infrastructure.

This is the UK’s chance to build sterling-denominated rails

Robert Armstrong at the Financial Times recently argued that the dollar “dominates” the stablecoin market, with over 99% of the $320 billion of stablecoins in circulation denominated in US dollars. Less than half a percent of the global market is in sterling according to the UK Treasury. That gap exists because no one has yet built a credible framework for sterling stablecoins, and realistically only the UK will. The opportunity is the UK’s alone, and at the moment it is going unrealised.

Stablecoins could reassert the UK as a global financial hub. At the moment, when instability strikes, people turn to dollars as the safe haven currency. But stablecoins now represent one of the largest pools of value in the world, and they, unlike dollars, are not wholly governed by the US Federal Reserve.

If the BoE can share the Lords’ ambition, the UK could tip the scales on stablecoin sovereignty and compete with the US and Europe.

The demand is clear

Stablecoins are being treated differently from other financial innovations. You can understand the BoE’s caution given the reputation of other cryptocurrencies, but there is a real market opportunity here, with tangible benefits and legitimate partners.

Cross-border payments are a key use case for stablecoins. Stablecoins aren’t disrupting a cross-border system that works, they’re replacing one that doesn’t. Oliver Wyman found that businesses pay $120 billion a year in cross-border fees, wait days for settlement, and lose margin to opaque FX spreads. Stablecoin payments settle in minutes, around the clock, with transparent pricing. Research from EY-Parthenon shows that demand is building fast among businesses: more than half of enterprise non-users expect to start using stablecoins within the next six to twelve months.

The area where we see stablecoins being adopted at scale is payroll. Traditional payroll works for full-time domestic employees on fixed pay cycles; it breaks down when companies are paying contractors across borders, in different currencies, on irregular schedules. Stablecoin payroll moves value over always-on digital rails rather than through a chain of banks, processors, and foreign exchange intermediaries, meaning faster access to earnings for workers and fewer manual workarounds for businesses. Payroll is becoming a competitive advantage: platforms that can pay quickly, predictably, and across borders will win the best talent.

The 2025 Global Payroll Payments Report lays bare the shortcomings of foreign exchange. Discrepancies affect 18% of international payroll transactions, despite payroll providers claiming 99% accuracy. 75% of businesses manage payroll across up to 25 countries, and 15% juggle more than 11 payment providers globally. These are exactly the failure points stablecoin rails remove, and businesses are not waiting for regulators to catch up.

Thankfully, the BoE has already indicated that it is reviewing both the scale of consumer holding caps and the requirement that 40% of backing assets sit in non-interest-bearing reserves. This is encouraging, but time is of the essence if the UK wants to capitalise on stablecoins. The Lords have set the direction. The Bank now has the opportunity to act on it.

 

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