Not content on confounding the Prime Minister over traditional nuts and bolts welfare policies, Nigel Farage and Reform UK have now made a pitch at the other end of the political ideas marketplace. They have just released a piece of draft legislation to make the UK the world’s leading digital currency hub.
Among the better known cryptocurrencies such as Bitcoin and Ethereum, it also makes provision for stablecoins, such as Tether, to become part of the UK’s usual way of doing business, including taxation.
This Bill highlights a current lacuna, that is the lack of a Sterling pegged stablecoin. Stablecoins have emerged as a transformative force, blending the advantages of cryptocurrencies with the stability of fiat currencies. As we stand on the cusp of a new financial era, the absence of a GBP-linked stablecoin represents a critical oversight for the United Kingdom, a nation historically at the forefront of financial innovation. A GBP stablecoin is not just desirable, but essential for the UK’s economic future, its global standing and the empowerment of its citizens and businesses.
Stablecoins differ fundamentally from traditional cryptocurrencies like Bitcoin or Ethereum. While the latter are known for their volatility, prices swinging wildly based on market sentiment, stablecoins are just that, stable.
They are pegged to a stable asset, typically a fiat currency such as the US Dollar or, potentially, the British Pound. This peg ensures price stability, making them practical for everyday use: payments, savings, and cross-border transactions. Yet, they retain the core advantages of cryptocurrencies: decentralisation, transparency, and the efficiency of blockchain technology. In short, stablecoins offer the liberty and innovation of crypto with the certainty and trust of fiat currency, a hybrid instrument poised to reshape global finance.
The stablecoin market has exploded in recent years. From a modest $20 billion market capitalisation in 2020, it surged to over $150 billion this year, with daily trading volumes frequently exceeding $100 billion, according to CoinMarketCap data. This growth reflects a global appetite for digital assets that combine speed, affordability, and reliability.
Yet, this burgeoning market is almost entirely dominated by US dollar-backed stablecoins; Tether and USD Coin alone command over 90% of the space. The pound, a currency with a storied history, is nowhere to be seen. The UK is missing out on a financial revolution, watching on as the dollar cements its hegemony in the digital realm. There is also the very real threat of a GBP-pegged stablecoin being created by a strategic competitor, not a domestic champion; which would ensure that the UK is driven out of its own market.
Stablecoins work by leveraging blockchain technology to facilitate transactions that are faster and cheaper than traditional methods. A payment that once took days via bank transfer, incurring fees at every step, can now be settled in seconds for pennies. This slashes transaction costs, undercutting legacy financial players – banks, payment processors, and remittance services – that have long treated customers as serfs, extracting rents without delivering innovation. Better still, stablecoins render Central Bank Digital Currencies (CBDCs) unnecessary. With their potential for state control and surveillance, CBDCs threaten individual liberty; while stablecoins, decentralised and user-driven, preserve it.
The City of London, a global financial titan, has dipped its toes into the crypto space, but is yet to take the full plunge. Fintech firms and exchanges have embraced digital assets, yet the broader financial establishment remains cautious, paralysed by regulatory uncertainty and a fear of the unknown. The Financial Conduct Authority has engaged, issuing rules to protect consumers and combat illicit finance, but its approach lacks the boldness needed to foster a thriving market. Meanwhile, the Bank of England dawdles, voicing concerns about stability and scalability while mulling a CBDC that few outside Threadneedle Street seem to want.
This hesitation is a mistake. Regulators must shift from a defensive posture to one that facilitates growth. Clear rules on reserve banking, transparency, and compliance could unlock the stablecoin market’s potential while addressing legitimate risks. A GBP stablecoin, properly regulated, could be a beacon of how to balance innovation with security – yet the UK’s inertia risks ceding leadership to the US, Singapore and the EU.
Stablecoins provide security to users of every stripe, large corporations, SMEs, and individuals. Pegged to a stable asset like the GBP, they shield users from the volatility that makes Bitcoin a rollercoaster ride. This reliability builds trust, making them a viable alternative to cash or bank deposits. For businesses, especially SMEs engaged in international trade, stablecoins are revolutionary. They enable near-instant cross-border payments, bypassing the delays and uncertainties of traditional systems. A UK exporter could sell to a buyer in Asia and receive GBP stablecoin payment in minutes, not days, improving cash flow and competitiveness.
Blockchain underpins this trust and speed, offering an immutable ledger that reduces fraud and enhances transparency. For SMEs in regions with shaky financial infrastructure, this dependability is a lifeline, allowing them to operate globally with the same ease as corporate giants.
The absence of a GBP stablecoin is a stark sign that the UK is being left behind in a global financial arms race. As the US tightens its grip through dollar-backed stablecoins, the UK’s currency risks irrelevance in the digital economy. This isn’t just a commercial failing, it’s a blow to national interests. A GBP stablecoin could champion UK priorities, both economic and moral, offering an alternative to the dollar for international trade. It would bolster the UK’s soft power, projecting influence through financial leadership rather than outdated imperial echoes.
Post-Brexit, the City needs a bold vision to remain a global hub. A GBP stablecoin could draw fintech talent, spur innovation and signal that the UK is open for business. Without it, we risk becoming a bystander as others shape the future.
Stablecoins are the future of global trade, a pie that’s growing fast, yet the UK has no slice of it. This isn’t a partisan issue; it’s a matter of national urgency. Whether you sit with the Government, the Opposition, Reform UK or even the Liberal Democrats, the logic is unassailable. A GBP stablecoin would empower businesses, protect liberty and assert the UK’s place in the world.
We need a national champion, a GBP stablecoin backed by robust regulation and the collective will of our financial and political leaders. The time for dithering is over. Let us unite, across parties, across sectors, to make this happen. Our economy, our sovereignty, and our future demand it.
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