A cross-party coalition of British 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 December 11, 2025, addressed to the Chancellor and signed by leading 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 rapidly becoming a pillar of the digital economy.
These tokens are reshaping financial transactions by reducing costs, speeding up settlements and promoting financial inclusion, they argued.
“Stablecoins are reshaping financial infrastructure,” the lawmakers wrote, noting that transactions reached $27.6 trillion in 2024, surpassing the combined activity on Visa and Mastercard by nearly 8%. Citibank, they cited, predicts that this figure could exceed $100 trillion by 2030.
However, they fear that the Bank of England’s proposed framework, which restricts the use of stablecoins in wholesale markets, bans interest on reserves and caps holding at GBP20,000, risks leaving the country on the sidelines of the looming wave of financial innovation.
Such limits, they argued, could make sterling-backed stablecoins “unattractive”, pushing investors towards dollar-pegged alternatives like USDC and USDT, both of which fall outside the UK’s regulatory reach.
“The result would be a flight from sterling-backed digital assets to dollar-based ones, creating a two-tier market in which most on-chain activity is denominated and settled in US dollars,” the lawmakers warned.
Their intervention comes as the United States aggressively passes its GENIUS Act to establish clearer regulation for digital assets, raising fears that London’s once unchallenged leadership in fintech and capital markets could be eroded by domestic political indecision.
The letter concludes by calling for a future-focused stablecoin framework that will secure international investment, support the growth of high-value fintech and strengthen the UK’s position as a global innovation hub.
secure international investments, support the growth of high value-added financial technologies and strengthen
“We welcome your commitment to “making the UK a leading destination for digital assets”. Now is the time to make this ambition a reality. We urge you to intervene,” the letter said.
Read: IMF Views Stablecoins as a Source of Risk for Emerging Markets, Experts Say We’re Not There Yet
