Uk Mps Warn Bank Of England Stablecoin Plans Could Drive Innovation...

Cross‑party MPs and members of the House of Lords have urged UK Chancellor Rachel Reeves to rein in the Bank of England’s proposed regime for systemic stablecoins.

A cross-party group of members of the House of Commons and the House of Lords in the United Kingdom, including former Defense Secretary Sir Gavin Williamson, shadow Science and Tech (AI) Minister Viscount Camrose and the former Prime Minister Rishi Sunak’s chief whip, Lord Hart, have urged Chancellor Rachel Reeves to intervene over the Bank of England’s proposed regime for systemic stablecoins.

In a joint open letter to the chancellor on Thursday, they warned that the Bank of England’s proposals for regulating stablecoins could drive innovation and capital offshore.

The parliamentarians said the plans risk turning the UK into a “global outlier” by barring most wholesale use of stablecoins outside the Digital Securities Sandbox, prohibiting interest on reserves and imposing what they call “impractical and anti-innovation” holding caps that could push activity into dollar stablecoins such as USDC (USDC) and USDt (USDT).​

The signatories argue that stablecoins are already becoming a “pillar of the digital economy,” and warn that the UK is “drifting towards a fragmented and restrictive approach” that will deter adoption and weaken London’s global role.

Related: UK central bank still ‘disproportionately cautious’ about stablecoins

They stressed that British pound-pegged stablecoins represent less than 0.1% of global issuance, claiming the current framework overstates depositor-flight risk while undercutting the government’s goal of making the UK a “world‑leading destination for digital assets.”​

Asher Tan, co-founder and CEO of UK Financial Conduct Association-registered CoinJar, one of the longest-running cryptocurrency exchanges globally, told Cointelegraph that the letter reflected a “growing frustration across the digital asset industry” that the UK risks “regulating tomorrow’s financial infrastructure with yesterday’s assumptions.”

Jakob Kronbichler, co-founder and CEO of Clearpool onchain credit marketplace, said that stablecoins are already functioning as settlement infrastructure for payments, capital markets and onchain credit, not “as experimental products.”

He said that if regulation continues to treat them as “niche or provisional,” it risks slowing adoption in the very areas where the UK wants to lead.

Source: CoinTelegraph