A cross-party coalition of UK MPs has called on Chancellor of the Exchequer Rachel Reeves to intervene to ensure the UK’s regulatory framework for stablecoins does not stifle innovation or drive capital offshore, warning that the Bank of England’s current proposals risk undermining the City of London’s attractiveness as a global financial hub.
In a letter to the Prime Minister dated 11 December 2025 and signed by prominent MPs and colleagues including Sir Gavin Williamson, Viscount Camrose and Baroness Verma, the group said stablecoins – digital tokens pegged to external references such as traditional fiat currencies – are rapidly becoming a pillar of the digital economy.
They argued that these tokens are reshaping financial transactions by reducing costs, accelerating payments, and promoting financial inclusion.
“Stablecoins are reshaping financial infrastructure,” the lawmakers wrote, noting that transaction value will reach $27.6 trillion in 2024, nearly 8% more than Visa and Mastercard combined. Citibank, which they cited, predicts that this number could exceed $100 trillion by 2030.
But they are concerned that the Bank of England’s draft framework, which would restrict the use of stablecoins in the wholesale market, ban interest on reserves and set a holding limit of £20,000, risks sidelining the country in an impending wave of financial innovation.
They argued that these restrictions could make sterling-backed stablecoins “less attractive” and drive investors towards dollar-pegged alternatives such as USDC or USDT, both of which are beyond the scope of UK regulations.
“The result will be a flight from pound-denominated digital assets to dollar-based digital assets, creating a two-tier market where most on-chain activity is settled in US dollars,” the lawmakers warned.
Their intervention comes as the US moves aggressively through the GENIUS Act to establish regulatory clarity for digital assets, raising concerns that London’s once unquestioned leadership in fintech and capital markets will be eroded by domestic policy indecision.
The letter concludes by calling for a forward-looking stablecoin framework that secures international investment, supports the growth of high-value fintechs and strengthens the UK’s position as a global hub for innovation.
Secure international investment and support the growth of high-value fintechs,
We welcome your commitment to ‘making 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 points to stablecoins as a source of risk for emerging markets, experts say we’re not there yet
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