UK House of Lords urges swift stablecoin regulation to support innovation

The House of Lords Financial Services Regulation Committee released a report urging the Bank of England and the Financial Conduct Authority to adopt a less prescriptive approach to stablecoin oversight. The committee backs most regulatory proposals, including a requirement that stablecoin issuers hold 1:1 reserves and a central‑bank backstop facility, but cautions against pre‑emptive limits on holdings, saying they could “unnecessarily inhibit the growth of GBP stablecoins.”

It warns that delaying the new digital‑asset regime, set to begin on 25 October 2027, would create uncertainty that prevents issuers from planning and could stall the development of a domestic stablecoin market. The report notes the global market is dominated by U.S. dollar‑denominated stablecoins and argues the UK must allow innovation while mitigating financial‑stability risks.