The Payments Association has asked the Chancellor of the Exchequer, Rachel Reeves, to clarify the position on stablecoins. The Association notes that during her last comment addressing digital assets this past April, it did not include any updates on the stablecoin sector.
In November 2024, the UK government indicated that it would proceed with a proposal to regulate crypto. The exception was the topic of stablecoins and bringing them into regulated payments. While this did not block stablecoin usage, the government’s position is that stablecoins represent a broader reform of payments.
Stablecoins broadly refer to a digital asset that is pegged to another real-world asset, such as a fiat currency or a commodity. In general, most interest centers on digital dollars or pounds as a means of improving transactions with less costly and more secure transfers.
The Payments Association has published a report on stablecoins, encouraging the UK government to take action to position the UK as a global hub for digital money and financial innovation. While some jurisdictions are keen on central bank digital currencies, the US is moving forward on stablecoins with legislation pending, which would provide clear rules. This may help move the stablecoin sector globally as expectations are for establishment entities to quickly enter the sector.
The Report by the Payments Association raises concerns that without clarity, fragmentation will occur, undermining the stablecoin sector in the UK. This may also push development outside of the UK.
Riccardo Tordera-Ricchi, Director of Policy & Government Relations at The Payments Association, noted that the EU intends to issue a digital Euro and China has been testing a digital yuan for years. At the same time, the trajectory of the US is clear, having denied retail CBDCs in favor of privately managed issuers of digital currency with whole reserves.
“We urge the Chancellor to make a clear statement about the UK’s commitment to develop a strong stablecoin environment. The market is evidence of clear use cases: from pay-ins and payouts to corporate treasury. Political leaders have to realise that there is no implementation of the AI agenda nor tokenisation of real-world assets without a clear and competitive stablecoins regulatory framework. Failing to grasp the importance of stablecoins means condemning the UK to irrelevance, and will compromise its role of global financial centre. I don’t think the Labour government can fail on delivering growth.”
The Report highlights the benefits of stablecoinsd including financial including and the need to remain competitive globally.
The report calls for HM Treasury to assume a central coordinating role, to advance work on the treatment of stablecoins under payments regulation, overseen by the FCA, and publish a clear roadmap. The UK must take a position of interoperability with other major currencies.
Lauren Edwards MP shared a comment on the Payments Association statement, declaring that “stablecoins offer a clear path to supercharging the UK economy.
The stablecoin report is available here after you hand over contact information.