Financial Services Regulation Committee

Parliament scrutinised the Government’s approach to stablecoins regulation, including the design of the crypto assets regime, consumer protection, and how regulation can enable innovation. The Treasury stressed a nimble, internationally competitive regime with consumer-protection foundations, while the FCA outlined its redemption, sandbox, and international-cooperation work. Key concerns included pace versus market readiness, how to define systemic risk, holding limits, and AML/illicit-finance safeguards as the regime evolves.

The committee examined the growth and regulation of stablecoins, hearing from Revolut and Agant about potential UK regimes, market viability, and the balance between innovation and safeguards. Revolut urged a pro-competition, less-prescriptive framework to unlock multi-product use (including GBP stablecoins) while emphasising the need for clear rules on redemption, KYC, and consumer protections. Agant outlined the mechanics of stablecoins, market size, and friction with regulation (notably AML registration and onboarding timelines), arguing for a principles-based approach and practical governance around backing assets, redemption, and distribution.

On 2026-03-18, the Financial Services Regulation Committee scrutinised the growth and regulation of stablecoins with Circle and Mastercard. Dante Disparte urged a principled, technology‑neutral UK regime that blends MiCA clarity with GENIUS Act safeguards, anchored by four core principles and onshore consumer protection to attract responsible issuers and safeguard monetary sovereignty. Jesse McWaters framed stablecoins as an additive evolution to existing payments, advocating for a technology‑neutral regime, ongoing regulator engagement, and the use of stablecoins to augment rather than replace current rails, with emphasis on interoperability, AML/CFT, and consumer protections. The session highlighted onshoring, credible reserve frameworks, and enhanced KYC/AML tooling as central to balancing innovation, financial integrity, and market competitiveness.

This session scrutinised the Bank of England’s planned systemic regime for sterling stablecoins and the role of private-sector data analytics in supervision. The BoE outlined a design where systemic stablecoins are jointly regulated by the Bank and the FCA, with central-bank accounts and backing assets split into 40% on deposit at the BoE and up to 60% in short‑term UK gilts, plus a potential BoE liquidity facility. It signalled a mid-2026 draft rules publication and finalisation by year‑end, with issuer applications by year‑end. It also debated risk-management tools (temporary holding limits for individuals and businesses) and a stepped pathway to scale, including an option for systemic status at launch and a coherent transition with the FCA regime. The Chainalysis testimony emphasised that stablecoins should be supervised like financial intermediaries, with robust reserves, AML/CFT, and redemption rights at par, while promoting blockchain analytics for proactive supervision, 24/7 data flows, and secondary-market monitoring. It also highlighted the technology’s potential to improve regulatory efficiency but raised concerns about illicit use, rapid cross‑border movement, privacy, and the need for interoperable, cross‑border regimes. Taken together, the session reveals a government-facing commitment to a forward-looking, stability-first regulatory architecture for stablecoins, alongside industry and regulator perspectives on data-enabled supervision, risk controls, and global interoperability.

The committee scrutinised the growth and regulation of stablecoins, hearing from Coinbase and Innovate Finance. Witnesses urged proportionate regulation to unlock UK competitiveness, highlighted the UK’s existing regulatory groundwork and the need to align with international regimes (MiCA, GENIUS Act), and identified key use cases (cross-border trade, corporate treasury, settlement, and tokenised assets). They flagged risks around liquidity, solvency, KYC/AML, and market competition, and argued for regulatory clarity to avoid stifling innovation while protecting consumers.

The committee examined growth and proposed regulation of stablecoins, hearing from Global Digital Finance and UK Finance. Key strands: (1) the UK regulatory calibration must balance risk mitigation with competitiveness to avoid offshore migration of stablecoin activity; (2) concerns about a 40% unremunerated reserve and an apparent cliff-edge between Bank of England and FCA regimes; (3) artifacts of custody, backing, and transparency for stablecoins, including one-to-one asset backing and regular attestations; (4) the roles of stablecoins as payment instruments versus investment products, and burnish on future use-cases like cross-border settlement and tokenised deposits; (5) the potential for a multi-money ecosystem where tokenised deposits and stablecoins coexist to support the UK economy, with emphasis on maintaining credit creation and regulatory coherence; (6) questions about UK competitiveness, international alignment, and the risk/benefit balance of advanced digital money infrastructures.