UK Crypto Giants Push for Stablecoin Strategy to Rewrite the Rules

The United Kingdom’s evolving approach to digital assets appears to be encountering both opportunities and challenges as industry stakeholders and policymakers navigate the complexities of regulation. A recent open letter from over 30 crypto firms, including industry leaders such as Coinbase, Kraken, and VanEck, has called on Finance Minister Rachel Reeves to establish a national stablecoin strategy. The letter emphasizes the need for the UK to act swiftly to remain a global leader in digital finance and avoid being a “rule-taker” rather than a “rule-maker” in the emerging digital asset era. The firms argue that a proactive, coordinated strategy would help position stablecoins—cryptocurrencies pegged to traditional currencies—not as risks, but as viable financial infrastructure tools that can bolster the UK’s financial services sector and generate new revenue streams [4].

The letter highlights concerns about the UK’s current regulatory approach, which classifies stablecoins as “crypto-assets with reference to fiat currency.” Critics argue this definition emphasizes form over function, drawing an analogy to defining a cheque as “paper with reference to currency,” despite both being negotiable instruments backed by regulated entities. A national strategy, the signatories suggest, could strengthen the UK’s position as a global financial hub and enhance its digital infrastructure, especially in relation to stablecoin adoption and the broader digital finance ecosystem [4].

Simultaneously, the UK is moving forward with the Property (Digital Assets etc) Bill, which is expected to become law after its second reading in the House of Lords on July 16, 2025. The bill introduces a new legal category for digital assets, including cryptocurrencies and stablecoins, as a form of personal property. This shift aims to provide greater legal clarity and facilitate the integration of digital assets into mainstream financial systems. For businesses operating in blockchain and digital finance, the bill’s passage represents a critical step toward aligning legal frameworks with technological advancements. It encourages firms to review contracts, ownership structures, and storage protocols to ensure compliance with the new standards and avoid legal uncertainties in ownership and enforcement [5].

The bill also reflects the UK’s broader Financial Services Growth and Competitiveness Strategy, which includes initiatives like the Digital Securities Sandbox, stablecoin regulation, and plans for a digital pound. The High Court has already recognized the property rights of crypto-assets in recent rulings, such as the 2024 case of D’Aloia v Persons Unknown and others, which affirmed the capacity of crypto assets to constitute property under English law. This judicial support reinforces the bill’s intent to formalize and clarify the legal status of digital assets, reducing the need for costly legal arguments and enabling more streamlined dispute resolution [5].

However, the UK’s digital asset ambitions are not without hurdles. The market for pound-pegged stablecoins remains relatively small, with a combined market capitalization of just £461,224 as of the latest available data. In comparison, the market for U.S.-pegged stablecoins like Tether (USDT) and Circle (USDC) dwarfs this figure, highlighting the UK’s current disadvantage in the global stablecoin landscape. Additionally, the collapse of stablecoins like Terra and Luna in 2022 has raised concerns about the risks associated with such assets, even as proponents argue they offer a bridge between traditional and digital finance. HSBC’s digital assets research head, Daragh Maher, has noted that stablecoins could facilitate cross-border transactions and improve capital mobility if the right regulatory environment is in place [4].

As the UK seeks to solidify its role in the digital asset space, the coming months will likely see increased scrutiny of its regulatory approach, both domestically and internationally. While legislative progress continues, the effectiveness of the UK’s strategy will depend on its ability to balance innovation with risk management and to foster an environment that supports both institutional and retail participation in digital finance.

Source:

[1] UK | Latest News & Updates (https://www.bbc.com/news/uk)

[2] News search results | FCA (https://www.fca.org.uk/news/search-results)

[3] Generating and using synthetic data for models in financial ... (https://www.fca.org.uk/publications/corporate-documents/synthetic-data-models-financial-services-governance-considerations)

[4] Crypto firms urge UK to form national stablecoin strategy (https://www.cnbc.com/2025/08/20/crypto-uk-stablecoin-strategy.html)

[5] UK: Property (Digital Assets etc) Bill set to become law (https://www.eversheds-sutherland.com/en/united-states/insights/property-digital-assets-bill-set-to-become-law)

[6] UK targets Russian crypto networks and Kyrgyz firms in ... (https://www.reuters.com/business/finance/uk-targets-russian-crypto-networks-kyrgyz-firms-new-sanctions-2025-08-20/)