.jpg)
House of Lords releases stablecoin recommendations report
03 June 2026 UK
Image: Jessica/stock.adobe.com
The cross-party House of Lords Financial Services Regulation Committee has published ‘Stablecoins: waiting for regulation’, a report making recommendations on the UK’s stablecoin regulatory framework.
Chaired by Baroness Noakes, the paper highlights the potential for a pound-sterling stablecoin to deliver benefits such as fast, low-cost payment options, greater efficiency in settlement, and innovations like programmable payments.
The report also suggests that, with the UK’s “mature financial services industry”, the region should seek to enable a sterling stablecoin market, allowing it to provide wider services in the currency’s ecosystem and subsequently create opportunities for business.
Conversely, the paper warns against theoretical risks to financial stability, outlining a possible “disintermediation of the traditional banking sector”, along with broader concerns about consumer protection, and the potential for stablecoins to be used in an illicit manner.
The committee supports much of the regulatory proposals made by the Bank of England (BoE) and Financial Conduct Authority (FCA), underscoring the importance of the requirement for issuers to back stablecoins one-to-one, along with the BoE’s proposed backstop lending facility.
Several further regulatory recommendations are made within the report, including an emphasis on flexibility that allows for future use cases for stablecoins, ensuring regulators do not inadvertently apply a more severe risk profile compared to other forms of payment, and making sure regulators encourage “safe and responsible innovation”.
Additionally, the committee wants authorities to adhere to current timelines and secure the timely rollout of the final regulatory regime.
The report also asks the BoE to reconsider its requirement to hold at least 40 per cent of backing assets in unremunerated central bank deposits, and not pre-emptively impose holding limits.
It also recommends that the Prudential Regulation Authority (PRA) alter its requirement for deposit-takers to issue stablecoins under distinct branding from insolvency-remote entities.
The committee wants HM Treasury to consider with the BoE and FCA whether existing legal frameworks are sufficient to both detect and deter illicit activity via private unhosted wallets, legislating the restriction of their use if deemed necessary.
Commenting on the paper, Lady Noakes highlights that the “global stablecoin market is dominated by US dollar stablecoins and evolved to serve cryptoasset trading”, adding that the UK is lagging behind the US and EU, but “moving in the right direction”.
She states: “Regulation needs to allow innovation while ensuring that risks are effectively mitigated.
“The shape of any UK stablecoin market will be strongly influenced by the direction of the regulatory regime, and so it is important that the regulators get this balance right.”
Chaired by Baroness Noakes, the paper highlights the potential for a pound-sterling stablecoin to deliver benefits such as fast, low-cost payment options, greater efficiency in settlement, and innovations like programmable payments.
The report also suggests that, with the UK’s “mature financial services industry”, the region should seek to enable a sterling stablecoin market, allowing it to provide wider services in the currency’s ecosystem and subsequently create opportunities for business.
Conversely, the paper warns against theoretical risks to financial stability, outlining a possible “disintermediation of the traditional banking sector”, along with broader concerns about consumer protection, and the potential for stablecoins to be used in an illicit manner.
The committee supports much of the regulatory proposals made by the Bank of England (BoE) and Financial Conduct Authority (FCA), underscoring the importance of the requirement for issuers to back stablecoins one-to-one, along with the BoE’s proposed backstop lending facility.
Several further regulatory recommendations are made within the report, including an emphasis on flexibility that allows for future use cases for stablecoins, ensuring regulators do not inadvertently apply a more severe risk profile compared to other forms of payment, and making sure regulators encourage “safe and responsible innovation”.
Additionally, the committee wants authorities to adhere to current timelines and secure the timely rollout of the final regulatory regime.
The report also asks the BoE to reconsider its requirement to hold at least 40 per cent of backing assets in unremunerated central bank deposits, and not pre-emptively impose holding limits.
It also recommends that the Prudential Regulation Authority (PRA) alter its requirement for deposit-takers to issue stablecoins under distinct branding from insolvency-remote entities.
The committee wants HM Treasury to consider with the BoE and FCA whether existing legal frameworks are sufficient to both detect and deter illicit activity via private unhosted wallets, legislating the restriction of their use if deemed necessary.
Commenting on the paper, Lady Noakes highlights that the “global stablecoin market is dominated by US dollar stablecoins and evolved to serve cryptoasset trading”, adding that the UK is lagging behind the US and EU, but “moving in the right direction”.
She states: “Regulation needs to allow innovation while ensuring that risks are effectively mitigated.
“The shape of any UK stablecoin market will be strongly influenced by the direction of the regulatory regime, and so it is important that the regulators get this balance right.”
NO FEE, NO RISK
100% ON RETURNS If you invest in only one digital assets news source this year, make sure it is your free subscription to The Digital Assets Edge
100% ON RETURNS If you invest in only one digital assets news source this year, make sure it is your free subscription to The Digital Assets Edge
