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The writer is chief strategy officer and head of global policy and operations at Circle, a stablecoin issuer
Stablecoins are becoming too important for the UK to lag behind in their development. While markets such as the US and EU devise forward-looking policies to incorporate stablecoins in their economic strategies, the UK has so far taken a more cautious approach. But it needs to act more swiftly and decisively, or risk missing the next phase of mainstream stablecoin adoption now under way.
Over the past year global stablecoin activity has accelerated, with transaction volumes rising 72 per cent in 2025 to more than $33tn. That growth reflects rising institutional and commercial adoption, supported in part by clearer regulatory frameworks in the EU and US. These are making it easier for institutions, enterprises, merchants and consumers to use stablecoins.
The Bank of England and the Financial Conduct Authority have proposed potential rules in the past few months. The House of Lords is currently conducting an inquiry on the growth of stablecoins and their regulation in the UK. While this proposed regulation would establish a foundation, the regulators need to balance reasonable requirements on reserves and compliance with enough flexibility to encourage innovators to call the UK home.
In not going first, the UK has an opportunity to take the best of the EU’s Markets in Crypto-Assets regulation and the US Genius Act, while making it distinctly British. MiCA established core definitions, governance standards and consumer protections; Genius is helping to create a fair playing field for stablecoin issuers and reinforcing demand for dollars as the backbone of the global economy. These elements, plus the UK’s strengths of a technology-neutral regulatory system that focuses more on outcomes than specifying processes, can make for a robust framework.
The Bank of England is right in acknowledging that stablecoins backed by sterling assets — which currently represent less than 0.5 per cent of the $320bn global stablecoin market — offer a distinct opportunity in raising demand for gilts and thereby benefiting public coffers. In October, BoE governor Andrew Bailey outlined his support for an advanced stablecoin regime.
However, by only allowing systemic stablecoin issuers to hold a maximum of 60 per cent of their reserves in interest-bearing short-term gilts, the proposed rules risk damping private sector participation. Short-term gilts are a high-quality, highly liquid asset. Limiting interest would curtail issuers’ ability to reinvest returns into product innovation, digital infrastructure and, most of all, people. In a market where scale, security and constant improvement are critical to competitiveness, these constraints could leave sterling-based stablecoins at a continued structural disadvantage, ultimately undermining the UK’s position as a leading hub for digital finance. Four principles should anchor the UK approach: one-to-one asset backing for stablecoins; high-quality liquid reserves; fast and enforceable redemption at par; and strong transparency under supervision.
Proposals for compulsory same-day redemption when requests are made provide little flexibility to conduct robust compliance checks enhancing consumer protection. Equally, proposals to introduce holding limits for individuals and institutions wanting to benefit from using stablecoins — $20,000 for individuals and $10mn for most businesses — make the UK an outlier compared with the EU and US. There is a middle ground available that would be more attractive to industry while keeping the “trust and confidence in money” the Bank of England has correctly prioritised.
This is not purely a financial play. Stablecoins and digital assets are contributing to an ecosystem of entrepreneurship and high-skilled jobs that the UK needs. Much has been said of London’s so-called “brain drain” — if the UK is serious about retaining talented young graduates, engineers and founders, it must foster an environment that signals genuine, long-term commitment to this sector. Without it, talent will continue to gravitate to jurisdictions where responsible fintech innovation is flourishing — places like New York, Paris and Singapore. The UK cannot afford to cede ground where it should be well-positioned to lead.
London has long held a privileged place in modern global finance because it understood a basic principle: markets thrive where trust, clear rules and innovation reinforce one another. That same principle should guide the UK now as digital money moves from the margins to the mainstream.
