Crypto: Uk House Of Lords Presses Coinbase Exec On Stablecoins, Kyc And...

Lawmakers asked if stablecoins could drain bank deposits and threaten financial stability, while Coinbase and Innovate Finance warned that strict regulation risks driving innovation offshore.

The United Kingdom House of Lords grilled Coinbase’s top international policy executive on Wednesday over whether stablecoins would drain bank deposits and add new risks to the UK financial system, pressing him on everything from Silicon Valley Bank‑style runs to illicit finance and Know Your Customer (KYC) rules.

During the Lords’ stablecoins inquiry, Tom Duff Gordon, Coinbase’s vice president for international policy, insisted that fully reserved, regulated stablecoins were “safer than uninsured bank deposits” because they are backed one‑to‑one by cash and high‑quality government securities and can be redeemed at par.

He argued that stablecoins could materially reduce payment costs, speed up cross‑border payments, and underpin new artificial intelligence driven “agentic” payment flows.

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Duff Gordon pushed back on suggestions that Coinbase was seeking to dodge KYC obligations and warned that overly tight Bank of England and Financial Conduct Authority (FCA) proposals on capital, holding limits and rewards risk would choke off competition. That, he said, would leave the UK lagging the United States’ Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act regime and Europe’s Markets in Crypto Assets Regulation (MiCA) framework in the global race to attract stablecoin innovation.

The Lords repeatedly challenged Duff Gordon on who actually bears redemption risk in a crisis, whether current arrangements merely shift risk from banks to non‑bank issuers, and whether allowing rewards on stablecoins would trigger a “deposit drain” from UK banks.

Duff Gordon countered that fears over disintermediation and credit creation were “wildly exaggerated,” and that stablecoins were already used by major corporates and card plans to cut payment costs.

Related: UK Lords launch stablecoin inquiry as Bank of England moves to finalize rules

Committee members also raised concerns about the role of stablecoins in crime, prompting Duff Gordon to emphasize Coinbase’s KYC, Anti-Money Laundering (AML) and sanctions screening of customers. He argued that onchain transparency and exchange-level controls could make it easier, not harder, to police illicit flows compared with traditional cash.

Source: CoinTelegraph