Originally published at Forbes
The rapid changes brought about by the Trump administration on the future of money by encouraging stablecoins have elicited some very forthright opinion pieces.
Former Chancellor George Osborne recently warned (registration required) that Britain risks becoming “completely left behind” in the global crypto payments race: “Having missed the first crypto wave, we’re about to miss the second: stablecoins.” As an advisor to Coinbase, maybe not too surprising a view.
Equally forthright, but fiercely against these developments, is Christine Lagarde, President of the European Central Bank, who warned that stablecoins could lead to the “privatisation of money,” and cites their potential hazardous influence as reason for urgently pushing ahead with the digital euro.
Meanwhile, the U.K.’s Governor Andrew Bailey has said he is “not convinced” of the need for a digital pound, and added, “As a matter of principle I fail to see why we need to change the system fundamentally.”
So, the U.S. is pressing ahead with stablecoins come what may, which has accelerated the EU’s creation of a digital euro in response, while the U.K. is taking a seemingly incredibly relaxed view of these seismic changes. Why? And is the U.K. right to do so?
A Bird’s-Eye View
There’s a lot of confusion in this space about the implications of blockchain in payments, and it’s largely because money, payments and infrastructure have always been separate entities. The use of blockchain effectively blurs these boundaries and merges them into one.
How? Because the money is encoded into the ledger, the payment is executed by transferring that asset directly between wallets via smart contracts and the infrastructure is encoded into the blockchain itself.
While clearly an incredibly efficient method, it poses additional problems. If private or decentralized systems control both the asset and the infrastructure, central banks could lose their role as the anchor of the financial system. Fragmentation could occur where digital currencies compete without uniform convertibility. And ultimately, it could end up posing huge systemic risks.
The Third Way
Bailey shares Lagarde’s concern about stablecoins, calling them a threat to the “singleness of money.” His stance is that the U.K. must adopt “tokenized deposits”—effectively using blockchain to speed up banking in retail and wholesale while retaining a 1:1 backing on any monetary creation.
Even if you don’t agree with him, the rationale of protecting stability is hard to argue against. But is it enough?
The Unseen Risks
Incredible weight has been given in the U.K. to monetary stability. Although crypto assets are not the issue at hand, what happened in this space was instructive. Up until August 2025, stringent rules banned U.K. consumers from investing in crypto assets on regulated exchanges.
The Financial Conduct Authority has said the reason for the change is that “we want to rebalance our approach to risk and lifting the ban would allow people to make the choice on whether such a high-risk investment is right for them.”
Or in plain English: Europeans have been investing in crypto alongside U.S. citizens, too, so it now looks over-cautious to maintain the ban.
“Missing the boat” is not simply about a missed opportunity; the next few years could change the entire financial order forever—and it may not be in the U.K.’s favor. I would argue that to secure the U.K.’s economic interests and fintech future, there are some concrete policy steps that should be enacted at the earliest opportunity.
Setting Standards For Stablecoins
Speed Up Sensible Regulation
Governments need to move beyond talk and finalize a clear, comprehensive framework for cryptoassets, not just stablecoins. For England, this means setting firm rules for exchanges, lenders and token issuers, and defining exactly how the FCA, Bank of England and Payment Systems Regulator divide responsibilities. A U.K. version of MiCA, tailored to the domestic market, would give certainty to innovators and protect consumers.
Encourage Innovation Under Control
Stablecoin issuers that are not systemic could be allowed to hold reserves in safe, liquid assets—short-term gilts, for example—and use some of the interest to strengthen operations. This would make sterling-based stablecoins more viable without putting users at risk. Models such as “regulated liability networks” could let banks issue tokenized deposits under Bank of England oversight, combining private innovation with public safeguards.
Be Clear On Digital Currency
Banks and governments, including The Bank of England, must decide whether a retail CBDC is worth pursuing. If not, then they should throw their weight behind regulated private alternatives, perhaps piloting stablecoins for limited government payments to test efficiency gains. If a digital pound is kept on the table in England, strong privacy guarantees will be essential to address public concerns. A hybrid approach—wholesale CBDC for banks, regulated stablecoins for the public—could deliver the best of both worlds.
Play To The U.K.’s Strengths
The U.K.’s fintech sector is already world-class. Expanding initiatives like the FCA sandbox to more stablecoin projects would allow innovation under supervision. A public‑private partnership to create a fully reserved “Britcoin” could give the U.K. a strong domestic player and prevent overreliance on dollar‑based stablecoins.
Shape Global Rules
As an international finance hub, the U.K. should be helping to set standards for digital money in forums like the G7, G20 and BIS. That includes pushing for transparency on reserves and reciprocal licensing for stablecoin issuers. If the U.K. leads at home, it can influence the rules abroad—just as it has done before.
The U.K.’s stance is reasonable, but I would argue that speed, details and contingency are currently the handbrakes on what could be a very promising future for finance in the U.K.
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