UK Lawmakers Urge Revision of Bank of England's Stablecoin Framework to Foster Innovation
A cross-party group of UK lawmakers sent a letter dated December 11, 2025, to Chancellor Rachel Reeves urging a revision of the Bank of England's proposed stablecoin framework. The group, which includes MPs and peers such as Sir Gavin Williamson, Viscount Camrose, and Baroness Verma, warns that the current draft framework could stifle innovation and result in capital flight.
The letter highlights concerns that the proposed framework would restrict the use of stablecoins in wholesale markets, ban interest on reserves, and cap holdings at GBP 20,000. These limitations, the lawmakers argue, could make pound-backed stablecoins unattractive to investors, pushing them toward dollar-pegged stablecoins like USDC and USDT, which would remain outside UK regulatory oversight.
Citing data that stablecoins processed $27.6 trillion in 2024—surpassing Visa and Mastercard combined by approximately 8%—and projections from Citibank estimating over $100 trillion by 2030, the lawmakers emphasize the significant scale and growth potential of stablecoins. They express concern about a possible capital flight to USD-denominated stablecoins, which would create a two-tier market with most on-chain activity settled in dollars.
The group also references regulatory developments in the United States, including the GENIUS Act, and argues that the UK must provide a forward-looking and innovation-friendly framework. Such a framework is necessary to attract international investment and maintain the nation's leadership in fintech.
