The UK encryption industry urgently calls: 30 executives jointly wrote to the Chancellor of the Exchequer, demanding the immediate establishment of a stablecoin regulatory framework to avoid falling behind.

Thirty executives from top crypto companies like Coinbase have jointly written to UK Chancellor Rachel Reeves, issuing an urgent warning: unless the UK immediately establishes a clear national strategy and regulatory framework for stablecoins, it will become a "rule taker rather than a rule maker" in the global digital asset competition. This article provides a deep analysis of the core demands of the joint letter, the flaws in the current regulatory definitions in the UK, and the marginalization of the pound stablecoin market, offering key insights for investors following the UK’s monetary policy and stablecoin regulatory trends.

Executives Join Forces to Pressure: UK Faces Risk of Becoming a "Rule Taker"

Thirty executives from top crypto assets companies have directly written to UK Chancellor Rachel Reeves, urging for immediate regulation of stablecoins to prevent the country from being marginalized in the accelerating wave of global crypto adoption. The letter was submitted on Wednesday, and according to CNBC, it clearly states that unless the UK develops a national strategy, it will ultimately have to abide by rules set by countries that act faster, particularly the United States. The executives pointed directly to the core issue, stating that the UK must take action immediately, or it will become a "recipient of rules rather than a maker of rules" in the digital asset era. They called for the development of a coordinated plan to integrate stablecoins into the financial infrastructure rather than viewing them as a ticking time bomb. The letter also warned that the UK is being hindered by regulations that fail to understand the nature, use, and importance of stablecoins.

The Regulatory Definition Debate: Industry Criticizes the Outdated Stablecoin Classification Method in the UK

One of the main issues raised in the joint letter is the current way UK law defines stablecoins. Regulators describe them as "crypto assets that reference fiat currency," a characterization that has left executives feeling embarrassed. The letter points out that this is akin to defining a check as "a piece of paper that references currency," which is both outdated and misleading. They argue that stablecoins should be viewed based on their actual functions—they are digital payment rails and have become part of the way crypto assets flow globally. The group behind the letter includes executives from Coinbase, Copper, Fireblocks, BitGo, and VanEck. They urge the UK government to view stablecoins as financial infrastructure—not a risk, but a tool that can drive new revenue streams and enhance demand for UK government bonds through blockchain-based platforms. They believe this will support the UK's role as a global financial center, a role that is being threatened as other countries take the lead.

The Dilemma of Pound Stablecoins: Poor Regulation Leads to Extreme Market Contraction

Executives also pointed out that the market size of stablecoins pegged to the British pound is extremely small, which is a symptom of poor regulation. Although the global stablecoin market has surpassed $280 billion, the total market value of all stablecoins pegged to the British pound remains stagnant at just £461,224 (approximately $621,197). Compared to dollar-backed, market-dominating stablecoins like Tether's USDT and Circle's USDC, this scale is minuscule. The executives went on to state that they are not ignoring past failures, such as the 2022 incident with Terra and its sister token Luna, which erased billions in market value and exposed the technical flaws of algorithmic stablecoins. That panic demonstrated how turbulent situations can become when projects fail to deliver on the "stability" aspect of their stablecoins. Although USDT subsequently regained its peg and traded at $1 again, the memory of that collapse still lingers.

Analyst Viewpoint: Stablecoins are the "cash equivalents" in the crypto space, and regulation remains a key obstacle.

Despite these risks, industry analysts still believe that stablecoins play a core role in Crypto Assets. Daragh Maher, head of digital asset research at HSBC, stated that they are like "cash equivalents" in the crypto space. He explained that almost all other digital assets are priced based on them, and they are crucial for making quick transfers using blockchain rather than old banking networks. "They are the reference or base currency for almost every kind of digital asset," Maher said. "They can also be used to transfer funds through blockchain payment rails instead of traditional banking methods." However, Maher also agrees with industry opinion on one issue: regulation remains the biggest hurdle. "The key to unlocking the potential of stablecoins lies in creating an appropriate regulatory environment for the industry," he wrote in a research report released on Wednesday.

Conclusion

This joint letter is the clearest and most concentrated appeal from the UK crypto industry to the government, highlighting the urgency and strategic risks brought about by falling behind in the global stablecoin regulatory race. The UK's current outdated and vague definition of stablecoins has severely restricted its innovation capability and market development, especially in stark contrast to the extreme shrinkage of the pound stablecoin compared to the prosperity of other mainstream stablecoins. The next response from the UK government is crucial for crypto companies and investors seeking clear rules. If a forward-looking national strategy and regulatory framework cannot be quickly introduced, the UK will not only miss the opportunity to become a leader in digital assets but may also be forced to accept rules set by others during the reshaping of the global financial system, which will weaken its status as a financial center in the long run. The clarity of regulation has become a key prerequisite for unleashing the immense potential of stablecoins and attracting investment.