The Payments Association, a trade group representing the payments sector, has urged The Chancellor of the Exchequer Rachel Reeves to take a clear stance on stablecoins, pointing out that her last announcement on crypto in April did not include any government plan to boost the stablecoin sector.
This comes as The Payments Association publishes a report on stablecoins, encouraging the UK government to take immediate and decisive action to position the UK as a global hub for digital money and financial innovation.
The report - developed by the Association’s Digital Currencies Working Group - delivers an analysis of current regulatory proposals and outlines key policy recommendations to unlock the transformative potential of stablecoins. While acknowledging recent steps taken by HM Treasury and the Financial Conduct Authority (FCA), the report warns that unclear rules and fragmented oversight risk pushing talent and capital offshore to more proactive jurisdictions like the US, EU, Hong Kong, Singapore and South America.
What are Stablecoins?
Stablecoins are digital assets that maintain a stable value, typically by being fixed to a currency, such as the Pound, although 99% are currently back by the dollar. Although their first use case was to offer a bridge between the often-volatile world of cryptocurrencies and traditional finance, several developments have suggested stablecoin is evolving quickly and is seeing significant real-world uptake. In fact, according to Forbes, Stablecoins are one of the clearest signs that global finance in general is evolving, processing more than $27 trillion in volume in 2024 alone — more than Visa and Mastercard combined.
Just in the month of May, Worldpay has teamed up with BVNK to enable stablecoin payouts for their clients in the US and Europe. Meanwhile, several Korean banks have joined forces to issue joint Korean stablecoin. The Wall Street Journal also reported that several US companies co-owned by JP Morgan Chase and Bank of America were considering doing the same. In recent days, even Deutsche Bank has announced exploring issuing its own stablecoin or joining a stablecoin industry-led initiative.
What does the report say?
Riccardo Tordera-Ricchi, Director of Policy & Government Relations at The Payments Association, said: “This is a pivotal moment. China has opened the way by issuing a CBDC in 2019. The EU has made it clear they will do a digital euro. The US has banned CBDCs and is going full stablecoins: in the global race towards digital money the UK government cannot afford to lose more time. 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 key findings and recommendations of the report include:
• A Strategic Opportunity: Stablecoins can supercharge cross-border payments, support financial inclusion, and transform how individuals and businesses store and move money. But without the right regulation, the UK risks missing out on billions in investment and innovation.
• Regulatory Urgency: The current draft legislation treats stablecoins as generic cryptoassets, failing to recognise their distinct role in modernising payments. The UK must clarify its regulatory timelines and align the Treasury, FCA, and Bank of England under a unified framework.
• Global Competition Is Heating Up: With Europe implementing MiCA and the US embracing bank-issued digital assets, the UK cannot afford to sit on the sidelines. Regulatory uncertainty is already driving firms to friendlier markets.
• A Proportionate, Risk-Based Approach: A one-size-fits-all model won’t work. The UK must adopt a tailored framework that supports use cases from decentralised finance to programmable money and AI-driven financial tools, while maintaining financial stability.
• Stablecoins as a Tool for Inclusion: Fintechs are already using stablecoins to serve underserved communities with faster, cheaper access to digital financial services. Regulation must actively support these innovations, not stifle them.
• An Open Door to Global Issuers: The UK’s strong legal infrastructure, international language, and fintech ecosystem make it an ideal base for stablecoin projects - but only if regulators create the right environment.
The report calls for HM Treasury to assume a central coordinating role, urgently advance work on the treatment of stablecoins under payments regulation, overseen by the FCA, and publish a clear, time-bound roadmap. Looking across the globe and forward in time, it also stresses that the UK ecosystem must be interoperable with dollar- and euro-based stablecoins under global standards, and that the Bank of England must adopt a balanced and transparent approach to systemic stablecoins.
Lauren Edwards MP (Labour Member of Parliament for Rochester and Strood), Co-Chair of APPG Digital Markets and Digital Money, said: "Stablecoins offer a clear path to supercharging the UK economy. By streamlining cross-border payments, reducing transaction costs, and fostering new financial services, they can unlock billions in investment, drive innovation, and cement the UK's position as a global leader in digital finance."
Lord Ranger of Norwood, Co-Chair of APPG Digital Markets and Digital Money, said: “The global stablecoin market is already over $250 billion and growing fast. It is critical UK government and regulators understand the risks, opportunities and pace of change so that we can retain and build on our valuable position as a leading global financial centre."
Natalie Lewis, Partner at Travers Smith and Lead of TPA Working Group Digital Currency said: The global race to lead the digital assets economy is intensifying. Jurisdictions all over the world are taking decisive action to stake their claim to being a hub for stablecoins. The UK needs to take urgent and decisive action to ensure we don't miss out on the transformative economic benefits stablecoins offer, along with the chance to empower UK consumers and businesses with greater choice, speed and security.