The current legal definition of stablecoins was criticized as outdated and misleading.
Thirty executives from top crypto companies have written directly to UK Finance Minister Rachel Reeves, calling for immediate regulation of stablecoins to prevent the country from being sidelined as crypto adoption accelerates worldwide.
The letter was submitted on Wednesday, and according to CNBC, it makes it clear that unless the UK creates a national strategy, it will end up taking orders from countries that move faster — especially the US.
The executives didn’t dance around the issue. They said the UK must act now or it will “be a rule-taker rather than a rule-maker in the digital asset era.”
They’re demanding a coordinated plan to integrate stablecoins into financial infrastructure instead of treating them like ticking time bombs. The letter warns that the country is being held back by regulations that miss the point of what stablecoins are, how they’re used, and why they matter.
Crypto execs reject UK’s definition of stablecoins
One of the biggest issues raised was the way UK law currently defines stablecoins. Regulators describe them as “crypto-assets with reference to fiat currency,” a phrase that makes the executives cringe.
The letter said that’s like defining a cheque as “paper with reference to currency.” It’s outdated and misleading. They argue that stablecoins should be seen for what they actually do — serve as digital payment rails that are already part of how crypto moves around the globe.
The group behind the letter includes executives from Coinbase, Kraken, Copper, Fireblocks, BitGo, and VanEck. They’re pushing the UK government to see stablecoins as financial infrastructure — not as a risk, but as a tool that can drive new revenue streams and strengthen demand for gilts through blockchain-based platforms.
They believe this would support the UK’s role as a global financial center, which is now under threat as other countries take the lead.
They also pointed to the tiny size of the pound-pegged stablecoin market as a symptom of bad regulation. While the global stablecoin market has already crossed $280 billion, the total market cap for all pound-linked stablecoins is stuck at just £461,224, or about $621,197. That’s microscopic compared to dollar-backed stablecoins like USDT from Tether and USDC from Circle, which dominate the space.
Market history and expert views push UK to act
The executives proceeded to say that they’re not ignoring past failures, like the one in 2022 with Terra and its sister token Luna that wiped out billions and exposed the technical weaknesses of algorithmic stablecoins.
That scare showed how shaky things can get when projects fail to deliver on the “stable” part of stablecoins. USDT has since regained its peg and now trades at $1 again, but the memory of that crash still lingers.
Despite those risks, industry analysts say stablecoins still have a central role in crypto. Daragh Maher, head of digital assets research at HSBC, said they act like the “cash equivalent” of crypto. He explained that nearly all other crypto assets are priced against them and that they’re essential for fast transfers using blockchain instead of old banking networks.
“They are the reference or base currency for nearly every crypto asset,” Maher said. “They can also be used for transferring money using blockchain pay rails rather than traditional banking methods.”
But Maher also agreed with the industry on one thing: regulation is still the biggest obstacle. “The key to capitalising on the potential of stablecoins lies in creating an appropriate regulatory environment for the sector,” he wrote in a research note released Wednesday.
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