UK payments industry pushes back against stablecoin restraints

The UK payments industry is sharpening its critique of the country’s approach to stablecoins, arguing that regulatory caution is slipping into competitive self-harm.

Industry pushes back against stablecoin restraints

In a new manifesto, The Payments Association has urged the Bank of England to rethink elements of its emerging stablecoin framework, warning that current proposals risk side lining the UK in a fast-moving global market.

The manifesto, Making Britain a Payments Powerhouse, was launched at the House of Commons and draws on contributions from more than 150 payments professionals across regulation, financial crime, digital currencies and merchant payments.

At its core is a clear message: the UK cannot claim leadership in digital finance while placing structural limits on one of its most promising building blocks.

Stablecoins: Supported in Principle, Constrained in Practice

The Payments Association backs the government’s ambition to create a safe and effective regime for cryptoassets, but argues that execution is lagging intent.

In particular, it is calling on the Bank of England to reconsider holding limits on systemic stablecoins, revisit asset-backing requirements and remove the effective ban on wholesale use.

According to the Association, these constraints undermine viable business models and deter issuers from launching sterling-backed stablecoins at scale. The result is a market where innovation exists largely in theory, while real-world adoption migrates elsewhere.

From Scepticism to Conditional Acceptance at the Bank

This industry pressure comes as the tone from Threadneedle Street begins to soften. In a recent Financial Times opinion piece, Andrew Bailey argued that it would be “wrong to be against stablecoins as a matter of principle”, acknowledging their potential role in modernising payment systems.

Bailey went further, suggesting that the financial system “does not have to be organised” around the traditional coupling of money creation and bank lending.

The implication—that money and credit provision could be partially separated—marks a notable evolution in official thinking, even if accompanied by repeated calls for caution.

A Global Market the UK Is Barely In

Globally, stablecoins are no longer a niche experiment. Circulation is approaching $300bn, dominated by dollar-backed tokens such as Tether and Circle.

Analysts at Citigroup forecast the market could reach $4tn by 2030.

By contrast, sterling-denominated stablecoins account for less than 1 per cent (yes, you did read that correctly) of global supply, with no significant domestic issuers operating at scale.

Industry figures increasingly see this not as a demand problem, but a regulatory one.

Regulatory Engagement Shifts Up a Gear

Alongside the Bank’s repositioning, the Financial Conduct Authority has opened applications for a “stablecoin sprint”, a two-day policy design event aimed at shaping future rules for retail, cross-border and B2B payments.

Further roundtables and sandbox initiatives are planned this year as the FCA finalises its crypto regime – but lest face facts…the polar glaciers are melting faster than UK policy.

For the payments industry, the message is simple: dialogue is welcome, but momentum matters. As The Payments Association argues, if payments are truly strategic national infrastructure, stablecoins cannot remain permanently stuck at the starting line.