Moneybrain has long recognised that the future of payments lies in on-chain, peer-to-peer systems, eliminating the need for traditional intermediaries. As early pioneers, we launched our stablecoins and asset-basket-backed Ethereum token, BiPs, blazing a trail in the digital asset space. We commend the UK for its bold ambition to become a global leader in stablecoins, a critical pillar of the future digital economy.
With artificial intelligence (AI) as a pivotal priority, digital settlement systems that integrate seamlessly with AI are essential. Stablecoins are not merely an alternative payment method but the foundation for the payment rails of the AI-powered era. They will become the modern equivalent of BACS, underpinning the infrastructure needed to ensure the UK remains competitive in AI expansion and broader innovation. This is not wishful thinking but a logical extrapolation of the technological and economic landscape.
The Elephants in the Room
While the path forward is clear, innovation often comes with challenges. Here are the key obstacles the UK must address to realise its stablecoin ambitions:
1. Bank of England’s Pushback
Historically, the Bank of England has expressed scepticism about cryptocurrencies, citing the volatility of assets like Bitcoin. However, stablecoins—backed by fiat or other stable assets—neutralise these concerns, offering stability and reliability. The Bank’s focus on central bank digital currency (CBDC) concepts has faltered, as CBDCs struggle to scale and deliver the rapid settlement capabilities required for an AI-enabled future. The UK must double down on stablecoins to build efficient payment rails, or risk developing AI infrastructure without the necessary financial backbone. The Bank of England must adapt its stance, as attempts to curtail stablecoin supply are shortsighted and misaligned with the UK’s innovation roadmap. U.K. Government Ministers have already signalled strong support for this direction, countries that fail to embrace stablecoins will regret their inaction.
2. FCA’s Regulatory Heavy Lifting
The Financial Conduct Authority (FCA) faces significant work in establishing a robust yet innovation-friendly regulatory framework for stablecoins. Fortunately, the FCA can build on existing models from international financial centres (IFCs). Moneybrain, for instance, operates out of Jersey, British Isles, under a Virtual Asset Service Provider (VASP) regulatory license—a balanced, middle-of-the-road framework. Jersey’s approach is not unique; Malta offers a lighter VASP license model, enabling companies to enter the market quickly and build rapidly. In contrast, Singapore has adopted a rigorous VASP licensing regime, attracting established firms like OKX SG and Paxos Digital Singapore, both of which hold in-principle approval for DPT (Digital Payment Token) services. These examples provide the FCA with tested building blocks, allowing the UK to craft a tailored framework without starting from scratch.
3. Draft crypto regulations from U.K. Gov
The most significant change in the UK’s draft legislative amendments is the designation of stablecoin issuance and custody as regulated activities under the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, establishing a clear legal framework for their operation. Amendments exempting backing assets from Alternative Investment Fund (AIF) or Collective Investment Scheme (CIS) classification and distinguishing stablecoins from electronic money are supportive, ensuring regulatory clarity, but secondary to this foundational step. Previously, stablecoins operated in a regulatory grey area, facing potential sanctions ill-suited to their financial structure and service provision, which hindered their viability in the UK. Speaking at the Innovate Finance Global Summit,
Finance Minister Rachel Reeves - "For the UK to be a world leader in digital assets, international co-operation is vital."
The reality
Stablecoins are no longer optional, they are a necessity. Options imply choices without significant consequences, but failing to embrace stablecoins would severely undermine the UK’s competitiveness in the “new economy” and coming AI age. As highlighted in Stablecoin:
The UK Opportunity by Innovate Finance and the Digital Pound Foundation – “The total market for tokenised assets is predicted to be 10% of global GDP by 2030.” Stablecoins will drive this transformation, enabling efficient, transparent, and programmable payments that power AI and other innovations.”
The UK’s ambition to lead in stablecoins is a bold and necessary step toward shaping the future of finance. Moneybrain, as a pioneer in stablecoins and digital assets, is proud to operate under Jersey’s VASP framework and support this vision. By addressing regulatory challenges and leveraging global best practices from jurisdictions like Malta and Singapore, the UK can establish itself as a global stablecoin hub. The time to act is now, stablecoins are the payment rails of the AI age, and the UK must seize this opportunity to remain at the forefront of innovation.