The United Kingdom House of Lords has opened its first formal hearing into stablecoins with a noticeably cautious tone, as lawmakers heard strong skepticism from expert witnesses about safety, regulation, and the long term role of digital stable money in the financial system. The session marked the beginning of a broader inquiry by the Financial Services Regulation Committee into how stablecoins should be treated as their use grows globally and as the UK considers a clearer regulatory framework.
During the hearing, members of the committee questioned whether stablecoins genuinely represent the future of money or simply serve as a supporting tool for the wider crypto economy. Evidence was presented by Chris Giles, economics commentator at the Financial Times, and Professor Arthur Wilmarth Jr, a US banking law specialist. Both witnesses expressed doubts about the systemic value of stablecoins, particularly in countries with already efficient banking and payments infrastructure such as the UK.
Professor Wilmarth was especially critical of recent developments in the United States, where stablecoin legislation now allows non bank firms to issue digital tokens linked to fiat currencies. He argued that this approach risks weakening long standing financial safeguards by enabling lightly regulated entities to operate in what is effectively the money business. In his view, payment instruments designed to function like money should only be offered by fully regulated banks. He contrasted the US approach with proposals being considered by the Bank of England, which he described as more cautious and robust.
Wilmarth also questioned whether stablecoins add anything fundamentally new to the financial system. He suggested that many of the functions promoted by stablecoin issuers could be achieved more safely through tokenised bank deposits, which would remain within established regulatory structures. This perspective reinforced concerns among committee members about financial stability, consumer protection, and regulatory arbitrage.
Giles echoed many of these reservations, arguing that stablecoins have yet to gain meaningful traction in the UK due to regulatory uncertainty and limited consumer demand. He described their primary role as a gateway into crypto markets rather than as standalone money. In a country where instant and low cost bank transfers are already widespread, he questioned whether sterling backed stablecoins offer a compelling advantage. Giles also raised concerns about the potential misuse of stablecoins in illicit finance, calling for stronger identity checks and anti money laundering controls.
Despite the critical tone of the hearing, supporters of stablecoins point to growing public and industry engagement. Advocacy group Stand With Crypto UK said interest in stablecoin policy has surged, with hundreds of thousands of people now following the issue and tens of thousands backing a petition calling for a pro innovation regulatory strategy. The group argues that balanced rules could allow the UK to support innovation while maintaining high standards of consumer protection and financial integrity.
