Crypto Leaders Push UK for Urgent National Stablecoin Strategy to Compete with US Dominance

UK risks becoming blockchain backwater without decisive regulatory action

Industry heavyweights warn Westminster can't afford to dawdle while US firms cement stablecoin supremacy. The message hits hard: innovate or get left in the digital dust.

Regulatory vacuum creates competitive disadvantage

Execs argue current hesitation hands massive first-mover advantage to American counterparts. They're watching US Treasury movements like hawks—every bureaucratic shuffle there translates to potential billions in market cap shifting across the Atlantic.

Blueprint demands clarity on collateralization and redemption

The proposal pushes for ironclad consumer protections wrapped in innovation-friendly frameworks. No more wishy-washy consultations—they want binding rules that let builders build instead of guessing regulatory whims.

Timing becomes critical factor

With other G7 nations already piloting CBDCs and private stablecoins, delay isn't just embarrassing—it's economically dangerous. The window for shaping global standards narrows by the quarter.

Traditional finance scoffed at crypto for years—now they're scrambling to tokenize everything but their dignity. Maybe they'll finally understand that moving faster than quarterly earnings reports is actually possible.

Crypto execs reject UK’s definition of stablecoins

One of the biggest issues raised was the way UK law currently defines stablecoins. Regulators describe them as “crypto-assets with reference to fiat currency,” a phrase that makes the executives cringe.

The letter said that’s like defining a cheque as “paper with reference to currency.” It’s outdated and misleading. They argue that stablecoins should be seen for what they actually do — serve as digital payment rails that are already part of how crypto moves around the globe.

The group behind the letter includes executives from Coinbase, Kraken, Copper, Fireblocks, BitGo, and VanEck. They’re pushing the UK government to see stablecoins as financial infrastructure — not as a risk, but as a tool that can drive new revenue streams and strengthen demand for gilts through blockchain-based platforms.

They believe this WOULD support the UK’s role as a global financial center, which is now under threat as other countries take the lead.

They also pointed to the tiny size of the pound-pegged stablecoin market as a symptom of bad regulation. While the global stablecoin market has already crossed $280 billion, the total market cap for all pound-linked stablecoins is stuck at just £461,224, or about $621,197. That’s microscopic compared to dollar-backed stablecoins like USDT from Tether and USDC from Circle, which dominate the space.

Market history and expert views push UK to act

The executives proceeded to say that they’re not ignoring past failures, like the one in 2022 with Terra and its sister token Luna that wiped out billions and exposed the technical weaknesses of algorithmic stablecoins.

That scare showed how shaky things can get when projects fail to deliver on the “stable” part of stablecoins. USDT has since regained its peg and now trades at $1 again, but the memory of that crash still lingers.

Despite those risks, industry analysts say stablecoins still have a central role in crypto. Daragh Maher, head of digital assets research at HSBC, said they act like the “cash equivalent” of crypto. He explained that nearly all other crypto assets are priced against them and that they’re essential for fast transfers using blockchain instead of old banking networks.

“They are the reference or base currency for nearly every crypto asset,” Maher said. “They can also be used for transferring money using blockchain pay rails rather than traditional banking methods.”

But Maher also agreed with the industry on one thing: regulation is still the biggest obstacle. “The key to capitalising on the potential of stablecoins lies in creating an appropriate regulatory environment for the sector,” he wrote in a research note released Wednesday.

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