Thirty executives from major cryptocurrency firms have urged the UK government to develop a national stablecoin strategy, warning that the country risks falling behind the US in digital asset innovation.

In an open letter to Finance Minister Rachel Reeves, leaders from companies such as Coinbase, Kraken, Copper, Fireblocks, BitGo, and VanEck argued that current UK regulations focus on stablecoins’ form rather than their function, which they say puts the financial sector at a disadvantage.

Stablecoins are cryptocurrencies pegged to government-backed currencies, with US dollar-linked coins like Tether’s USDT and Circle’s USDC dominating the US$280 billion global market.

By contrast, stablecoins tied to the British pound collectively have a market capitalization of less than US$1 million.

🔗 Source: CNBC

🧠 Food for thought

1️⃣ UK’s regulatory delay risks losing competitive advantage to early movers

The call for a UK national stablecoin strategy reflects a genuine competitive disadvantage compared to other major financial centers.

The EU implemented its comprehensive Markets in Crypto-assets Regulation (MiCA) in June 2023, which became fully applicable by December 2024, while Hong Kong passed its Stablecoins Bill in May 2025 with implementation scheduled for August 202512.

Meanwhile, the UK is still conducting consultations and releasing draft legislation as of Q2 2025, with no definitive implementation timeline3.

This regulatory gap translates directly into market share losses. While the global stablecoin market is valued at over $280 billion, British pound-pegged stablecoins represent only £461,224 in combined market capitalization—a microscopic 0.0002% share despite the UK’s status as a major financial center.

The disparity demonstrates how regulatory clarity drives market development, as issuers and users gravitate toward jurisdictions with established frameworks rather than waiting for uncertain regulatory outcomes.

2️⃣ Historical currency peg failures highlight the importance of robust stablecoin regulation

The push for comprehensive stablecoin regulation gains urgency when viewed against the historical track record of currency pegs, where only 14% have survived since 18004.

The 2022 collapse of algorithmic stablecoin TerraUSD, which wiped out $200 billion in market value, exemplifies how quickly confidence-based systems can unravel without proper safeguards5.

Stablecoins face similar structural challenges to money market funds, particularly around large-scale redemption requests and liquidity management during market stress6.

Recent Coinbase developments