Coinbase Urges UK Lords to Scrap Bank of England Stablecoin Caps
On Wednesday, Tom Duff Gordon, Coinbase’s vice president of international policy, appeared before the House of Lords Financial Services Regulation Committee and told peers that the Bank of England’s proposed caps and reserve rules would “choke off competition” and leave the UK worse-positioned than both Washington’s GENIUS Act framework and Brussels’ MiCA regulation.
Stablecoin revenue hit $1.35 billion in 2025, up from $911 million the year before. Bloomberg Intelligence estimates that figure could grow two to seven times under the US GENIUS Act framework.
Caps that limit how much stablecoin any individual or business can hold directly constrain that market. Which is presumably why Duff Gordon was in Westminster on a Wednesday morning.
What the Bank of England Actually Wants and Why
The Bank of England’s stated rationale points that during a period of financial stress, people might rapidly shift deposits from commercial banks into systemic stablecoins, the digital equivalent of a bank run, except the exit ramp is a blockchain rather than a cashpoint queue.
Temporary holding limits, the Bank says, would slow that kind of flight while the regulatory framework matures. Requiring 40% of reserves to sit in non-interest-bearing central bank accounts provides a further stability buffer.
It is not an unreasonable concern on its face. But Professor Simon Gleeson, speaking at an earlier session of the same committee, described the limits as “bonkers” before moderating slightly to suggest that regulators were “writing very impactful rules to address problems that nobody knows will actually happen or not.”
That tension, prudent risk management versus rules that anticipate a scenario that may never materialise, is at the heart of the UK’s stablecoin debate. Duff Gordon pushed back specifically on the reserve requirement, arguing it would undermine issuer economics and make UK-domiciled stablecoins structurally uncompetitive with offshore alternatives.
The Competitive Pressure
The Lords were not entirely sympathetic. Committee members pressed Duff Gordon on redemption risk, who actually bears the loss if a stablecoin issuer fails during a market shock, and on whether allowing yield on stablecoins would structurally mimic the deposit-taking functions of a bank without the corresponding regulatory oversight.
He also faced questions about crime, responding that on-chain transparency and exchange-level KYC and AML controls make stablecoins easier to police for illicit flows than cash, not harder. Whether the committee found that persuasive is unclear from the session’s public record.
Adam Jackson, chief strategy officer at Innovate Finance, appeared alongside Duff Gordon and told the committee the UK risked building a regime “more prescriptive and less competitive” than MiCA. “We risk being second movers but second movers who are less competitive than the first movers,” he said.
That captures the bind: comprehensive UK stablecoin legislation won’t come into force until 2027, by which time both the GENIUS Act and MiCA will be operational and attracting the issuers and liquidity London is hoping to capture. The FCA’s sandbox, currently testing issuance with Revolut and three others, is meant to inform the final rulebook.
