UK Crypto Leaders Push for Strategic Shift as Stablecoin Race Heats Up

A coalition of leading cryptocurrency firms has called on the United Kingdom to establish a national stablecoin strategy to ensure its competitiveness in the rapidly evolving digital asset landscape. In an open letter addressed to Finance Minister Rachel Reeves, 30 industry leaders urged the government to act swiftly to avoid ceding influence to the United States in this emerging sector. The letter emphasizes the need for a proactive approach that positions stablecoins not as a regulatory burden, but as a valuable component of the country’s financial infrastructure.

Stablecoins, which are cryptocurrencies pegged to traditional government-backed currencies like the U.S. dollar or British pound, are seen as a bridge between traditional finance and digital assets. The most widely recognized stablecoins include Tether’s USDT and Circle’s USDC. The global stablecoin market exceeds $280 billion, according to CoinGecko, yet the market for pound-pegged stablecoins remains relatively small, with a combined market capitalization of just £461,224 as of the latest data.

Industry representatives argue that the current regulatory framework in the U.K. is ill-suited to the functional nature of stablecoins. They criticize the legal definition of stablecoins as “crypto-assets with reference to fiat currency,” calling it overly formalistic. The letter compares this definition to treating a cheque as merely “paper with reference to currency,” despite both being negotiable instruments backed by regulated entities.

A well-crafted stablecoin strategy, the signatories suggest, could enhance the U.K.’s position as a global financial hub. They argue it could unlock new revenue streams through fees and foreign exchange, as well as support demand for gilts via digital channels. The letter was signed by executives from major firms including Coinbase, Kraken, Copper, Fireblocks, BitGo, and VanEck, signaling broad support across the crypto industry for a more forward-looking policy approach.

Despite the potential benefits, stablecoins are not without risks. The 2022 collapse of the Terra and Luna stablecoins highlighted the vulnerabilities in some stablecoin models, including the temporary de-pegging of USDT from its $1 value. These events underscore the need for robust regulatory safeguards to maintain public trust and system stability.

HSBC’s head of digital assets research, Daragh Maher, noted in a recent report that stablecoins are critical for integrating traditional and digital financial systems. He described them as the “cash equivalent of digital assets” and emphasized their role in enabling cross-border payments through blockchain-based payment rails. However, he stressed that regulatory uncertainty remains the primary barrier to their widespread adoption. Creating a clear and supportive regulatory environment, according to Maher, is essential for unlocking the full potential of stablecoins in the U.K. and beyond.

Source: [1] Crypto firms urge UK to form national stablecoin strategy (https://www.cnbc.com/2025/08/20/crypto-uk-stablecoin-strategy.html)