UK House of Lords Launches Inquiry Into Stablecoin Regulation
- UK lawmakers begin a stablecoin inquiry as regulation moves closer to full rollout.
- The review compares UK stablecoin growth with the United States and the European Union.
- Evidence is expected to guide how digital money fits into the UK payment system.
The House of Lords Financial Services Regulation Committee has launched a formal inquiry into stablecoins as the UK prepares a new regulatory framework for digital money. Lawmakers will examine market growth usage patterns and regulatory risks while inviting written evidence submissions by 11 March 2026. The review sits alongside active policy work by regulators and comes as stablecoins move closer to mainstream payment use.
The committee said it will assess how the global stablecoin market has developed since 2014. It will compare the UK market with those in the United States and the European Union. It will also examine the projected growth of sterling-denominated stablecoins. The inquiry seeks evidence on who uses stablecoins and for what purposes.
According to the committee chair, “We have launched this inquiry to assess the opportunities and risks that the growth of stablecoins may present for the UK financial services sector and the wider economy.” Baroness Noakes said the inquiry will also test whether proposed rules provide proportionate responses to market developments.
Scope Covers Markets, Usage, and Global Lessons
The inquiry will map how stablecoins have evolved globally over the past decade. It will consider whether the UK remains competitive as other regions push ahead with clearer frameworks.
At the same time, lawmakers will examine how the UK compares with the US and EU in market size, adoption, and regulatory design. Another core focus involves sterling-denominated stablecoins and their growth potential. The committee will examine how these tokens function in payment trading and other financial uses.
It will also gather evidence on which users rely on stablecoins and why. Alongside usage trends, the inquiry will assess risks and opportunities linked to stablecoin adoption. This includes financial stability concerns, consumer protection, and market resilience. The committee will also study regulatory approaches in other jurisdictions.
Lawmakers want to identify lessons that could inform the UK framework as adoption grows. The inquiry will then test whether the UK should apply stricter controls or retain regulatory flexibility as digital money evolves.
Regulatory Context and Market Impact
The investigation supports the current research efforts of the Bank of England and the Financial Conduct Authority. The two regulators are creating stablecoin regulations that will apply to digital currencies that are expected to achieve widespread adoption for payment purposes.
The Bank of England has launched a consultation on systemic stablecoins. The tokens pose financial stability risks because they can be used for widespread adoption. The proposed framework aims to ensure stablecoins remain properly backed and operationally resilient.
It also clarifies how issuers would fall under joint supervision by the Bank and the FCA. The bank has proposed temporary holding limits of £20,000 for individuals and £10 million for businesses. It plans to finalize the framework by year-end.
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The Bank also intends to extend the digital securities sandbox to test wholesale settlement using regulated stablecoins. At present, stablecoins such as USDC and USDT, used mainly for crypto trading, remain outside UK payment regulation. That status will likely change under the new regime, with full implementation targeted for October 2027.
UK Weighs Single Regulator Model as Stablecoins Mature
Industry responses remain mixed, with some firms backing stronger consumer protections while others warn of slower innovation. This centralized UK model contrasts with the United States approach under the proposed CLARITY Act. That bill would divide oversight between the Securities and Exchange Commission and the Commodity Futures Trading Commission, including payment-related stablecoins.
For UK lawmakers, the inquiry raises one pivotal question: can a single-regulator structure balance innovation and financial stability as stablecoins begin to resemble mainstream payment tools? Written submissions remain open until 11 March 2026. Afterward, the committee will take oral evidence and publish findings that could shape how regulators finalize the UK stablecoin framework.
