A cross-party coalition of UK lawmakers has called on Chancellor Rachel Reeves to intervene and ensure Britain’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 centre.
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 pegged to an external reference like traditional fiat currencies, are fast becoming a pillar of the digital economy.
They argued that these tokens are reshaping financial transactions by reducing costs, accelerating settlements, and promoting financial inclusion.
“Stablecoins are reshaping financial infrastructure,” the lawmakers wrote, noting that transactions reached $27.6 trillion in 2024, surpassing the combined activity of Visa and Mastercard by nearly 8%. Citibank, they cited, projects that this figure could exceed $100 trillion by 2030.
However, they are concerned that the Bank of England’s draft framework, which restricts the use of stablecoins in wholesale markets, bans interest on reserves and limits holdings to £20,000, risks leaving the country out of the impending wave of financial innovation.
They argued that such limits could make pound-backed stablecoins “unattractive”, driving investors towards dollar-pegged alternatives such as USDC and USDT, both of which are outside the UK’s regulatory reach.
“The result would be a flight from pound-backed digital assets towards dollar-based assets, creating a two-tier market in which most on-chain activity is denominated and settled in US dollars,” the lawmakers warned.
His intervention comes as the United States moves aggressively through its GENIUS Act to establish regulatory clarity for digital assets, raising fears that London’s once unquestioned leadership in financial technology and capital markets could be eroded by domestic political indecision.
The letter concluded by calling for a forward-looking stablecoin framework, which will secure international investment, support the growth of high-value fintech and strengthen the UK’s position as a global innovation hub.
secure international investment, support the growth of high-value fintech and strengthen
“We appreciate your commitment to ‘make the UK a leading global destination for digital assets’. Now is the time to deliver on 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 are not there yet
