Crypto Firms Urge the UK to Adopt a National Stablecoin Strategy

Context and Industry Call

A group of around 30 executives from leading cryptocurrency companies — including Coinbase, Kraken, Copper, Fireblocks, BitGo, and VanEck — have sent a letter to the UK Chancellor of the Exchequer, Rachel Reeves, urging the government to adopt a national strategy for stablecoins.

The main concern is that the UK risks becoming a “rule-taker” (simply following regulations set elsewhere) instead of positioning itself as a “rule-maker” in the digital asset era.

Executives criticized the current legal definition of stablecoins in the UK — described merely as "crypto-assets referencing fiat currency" — calling it outdated and inadequate. They argue that this narrow classification does not reflect the critical role stablecoins play as essential digital infrastructure in the global crypto market.

An Untapped Market for Sterling-Backed Stablecoins

The market for stablecoins pegged to the British pound remains very limited, with a total value of just £461,224 (around $620,000). By contrast, the global market for dollar-denominated stablecoins is estimated at $280 billion.

Global Lessons and Regulatory Developments

The crypto industry also points to past lessons, such as the 2022 collapse of the Terra/Luna stablecoin, which highlighted the risks of algorithmic models. However, industry leaders argue this does not undermine the usefulness of stablecoins; instead, it underscores the need for stronger regulation.

HSBC analyst Daragh Maher described stablecoins as “the cash equivalent of the crypto ecosystem”, serving as the reference currency for most digital assets and enabling fast transfers across blockchain networks while bypassing traditional banking systems.

U.S. and EU Lead the Way

1.In the United States, the GENIUS Act (passed in July 2025) requires stablecoins to be backed by U.S. dollars or other low-risk assets, with strict regulatory oversight, audits, and a dual federal-state supervisory framework.

2.In the European Union, the Markets in Crypto-Assets (MiCA) regulation came into effect at the end of 2024, providing a comprehensive framework for all types of crypto assets, including stablecoins.

The UK at a Crossroads: Reaction or Opportunity?

The UK government recently announced that overseas stablecoin issuers would not be required to comply with the new British crypto regime — a softer stance compared to international issuers of other crypto assets, who must seek authorization.

Former Chancellor George Osborne warned that the UK is falling behind in the global crypto boom, as countries like the U.S., Singapore, and Abu Dhabi move ahead with comprehensive frameworks, including specific rules for stablecoins.

Meanwhile, Coinbase UK’s leadership argued that the country has a “second-mover advantage” — learning from U.S. and EU experiences to design a more effective regulatory model.

By mid-2025, new legislation is expected to establish detailed rules for crypto trading platforms, including standards for consumer protection, transparency, and operational resilience — with implementation targeted for the end of the year.

Regulators are also considering lifting the ban on crypto ETNs (Exchange Traded Notes) for retail investors, a move that would bring digital assets closer to mainstream financial markets.

The UK crypto industry is pressing for a clear and forward-looking framework on stablecoins — one that recognizes them as vital financial infrastructure rather than just speculative instruments.

The central argument is simple: without swift action, the UK risks losing influence in a rapidly expanding global sector.

With the GENIUS Act in the U.S. and MiCA in the EU already in place, the UK finds itself at a crossroads. It has the chance to leverage its second-mover advantage and design a more balanced, innovation-friendly regulatory regime — but only if it acts now.

nykublondu 21/08/2025