UK House of Lords Launches Review of Stablecoin Regulation

• UK Parliament launches review of stablecoin regulation to balance innovation and financial stability.
• Review compares UK stablecoin adoption with US and EU models to protect competitiveness.
• Inquiry weighs payment efficiency gains against risks to banks’ monetary policy and crime.

The UK Parliament has opened a detailed review of stablecoin regulation as digital currencies gain wider financial relevance. The House of Lords Financial Services Regulation Committee has launched a formal inquiry to examine how stablecoins have grown globally and what that growth means for Britain. 

Significantly, the review arrives as policymakers weigh innovation against financial stability. Hence, lawmakers want clearer evidence before finalizing long-term rules.

The committee has invited written submissions from industry participants, academics, regulators, and consumers. Additionally, the inquiry focuses on both sterling-denominated and US dollar-backed stablecoins. 

Lawmakers aim to understand how usage patterns have changed since early crypto experiments began in 2014. Consequently, the review seeks to position the UK alongside global peers rather than behind them.

Global Growth and the UK Market

Stablecoins now support trading, payments, and settlement across digital markets. Moreover, their role has expanded beyond crypto exchanges into remittances and merchant payments. The committee will compare the UK market with developments in the United States and the European Union. However, Britain’s domestic stablecoin sector remains smaller and more cautious.

Sterling-linked stablecoins could grow gradually as businesses test blockchain-based payments. Besides, fintech firms see potential in faster settlement and lower cross-border costs. The committee will also examine who uses stablecoins and why demand continues to rise. Importantly, existing UK financial rules may already shape adoption, sometimes slowing expansion.

Risks, Regulation, and Policy Impact

Lawmakers want evidence on economic risks alongside opportunities. Stablecoins could challenge banks, payment firms, and even monetary policy transmission. Consequently, the inquiry will assess possible effects on price stability and financial resilience. Additionally, the committee will consider financial crime risks, including illicit transfers and weak oversight.

The review will evaluate how stablecoin growth aligns with the objectives of the Bank of England, the Financial Conduct Authority, and the Prudential Regulation Authority. These bodies oversee stability, consumer protection, and market integrity. Hence, their proposed frameworks face close scrutiny.

Learning From Other Jurisdictions

The committee will also study regulatory approaches in the US and EU. Moreover, lawmakers want to know which models encourage innovation without creating systemic risk. The inquiry will assess whether proposed UK rules support competitiveness and international growth.

The committee chair, Baroness Noakes, has emphasized balanced oversight. Hence, the review seeks proportionate regulation rather than heavy restrictions. Submissions remain open until March 11, 2026. Consequently, the findings could shape the UK’s digital finance strategy for years.

Related: UK Banks Delay or Block 40% of Transactions to Crypto Platforms, Report Says