UK MPs Warn Bank of England’s Stablecoin Plans Could Drive Innovation Offshore

by

A motley crew of UK lawmakers-ranging from the former Defense Secretary Sir Gavin Williamson to Lord Hart, the man who once whipped Rishi Sunak’s MPs into shape-have banded together to sound the alarm. They’re calling on Chancellor Rachel Reeves to step in and stop the Bank of England from potentially blowing a hole in the UK’s future by strangling innovation and driving capital straight into the waiting arms of offshore markets.

In a delightful open letter to the Chancellor-because, of course, letters are the way to get anything done in politics-they warned that the Bank’s plan for regulating stablecoins could very well send the UK into a deep digital slumber. They fear this might push all that lovely financial innovation overseas where it’ll flourish like a well-watered plant in the tropics. 🌴

Stablecoins: A Digital Economy’s Unsung Hero

The parliamentarians aren’t mincing words here: the UK could soon be the “global outlier” on stablecoins, forcing most of the use cases outside the Digital Securities Sandbox (talk about a party pooper). And don’t get them started on those “anti-innovation” holding caps! In their eyes, these could shoo away activity faster than a squirrel with a nut allergy. 🐿️

Apparently, stablecoins aren’t just some futuristic geeky toy anymore. They’ve become the cornerstone of the digital economy, and these MPs are worried the UK is about to play the role of the grumpy old man yelling at the cloud. They claim that the Bank of England’s proposals could weaken London’s global reputation, effectively throwing its role as a financial center down the drain. 🏴‍☠️

To put it in simple terms: British pound-pegged stablecoins make up less than 0.1% of the global market share. It’s like throwing a tantrum over a crumb while ignoring the cake. The MPs argue the Bank’s current stance might make the UK appear overly cautious and undercut the government’s dreams of making it the global leader in digital assets. Sorry, not sorry. 🍰

Asher Tan, CEO of CoinJar (which sounds like a great place to stash your crypto, if you ask me), said the letter reflects the growing frustration of the entire digital asset industry. According to him, the UK is trying to regulate the financial future using the logic of a previous era-almost like trying to play Mario Kart with a joystick. 🚗💨

And Jakob Kronbichler, CEO of Clearpool, added his voice to the choir, saying stablecoins are already being used for real payments and markets, not some fancy digital novelty. If the UK keeps treating them like experimental science projects, it could slow things down when the UK should be speeding up.

The Bank of England’s Master Plan for Stablecoins

Under the Bank’s proposed regulations, individual stablecoin users will face a temporary cap of £20,000 per coin (around $26,500), and businesses will get a limit of $13.3 million. Big corporations, of course, get to play by different rules. Gotta love those loopholes! 🕳️

On top of that, issuers will be required to keep at least 40% of their reserves in unremunerated deposits at the bank, with up to 60% in short-term UK government debt. That’s one way to make sure the money stays safe, but Tan isn’t so convinced. He argues these hard caps will just push innovation into friendlier jurisdictions. Who’s surprised? Not me. 😏

How Does the UK Stack Up to the Rest of the World?

Over in the European Union, the MiCA regulations are already up and running, providing a neat little framework for stablecoins. They’re all about protecting monetary sovereignty, not choking the market. Meanwhile, in the US, the GENIUS Act is designed to support large-scale use of stablecoins without being a buzzkill. The UK? Well, let’s just say their approach could end up putting them in the slow lane while the EU and US speed ahead in the race for capital markets innovation. 🏎️

Kronbichler summed it up best: if pound-denominated stablecoins are less efficient than their offshore counterparts, the activity won’t just disappear-it’ll pack up and head elsewhere. No one’s got time for red tape in 2025, folks. 🕶️

Read More

2025-12-12 16:51